• The Western Balkans Investment Framework facilitates the financing of infrastructure projects with regional characteristics
• South East Europe Transport Observatory has established new methodology on project priority
Infrastructure projects demand significant investments especially when they have regional dimensions. In this context, the economic development of Western Balkans is closely related to infrastructure projects and the concentration of investments in the railway system. This region faces the problem of insufficient investments for railway infrastructure projects which lowers the share of railway transport below 50%. In order to benefit from investments, the countries in this region have to elaborate strategies to include those projects to be financed by institutions.
Thus, accessing funds for financing railway infrastructure projects is vital for every country in the region, especially given the authorities’ increasing intention of focusing on railway transport. The Western Balkans Investment Framework (WBIF) is one of the institutions which grant financing to the infrastructure projects in Western Balkans and the main requirement for any proposed project has to be part of the SEETO – South East Europe Transport Observatory – programme or included into the EU/SEETO policies.
The WBIF Strategy is defined by the national and regional strategies and by the multiannual SEETO plan that has established a new methodology on the hierarchy of projects. This will prioritize the railway projects in the Western Balkans region, especially since the primary network covered by SEETO will become part of the TEN-T network.
In the interview below, Mr. Yanni Papapanagiotou, Infrastructure Expert of WBIF, details problems such as accessing funds, the importance of strategies for including infrastructure projects into the national plans in the Western Balkans region, as well as the launch of policies to facilitate de financing of projects.
Railway PRO: What are the main requirements in accessing funds from the countries in Western Balkans for the modernisation of the infrastructure? Does the Western Balkans Investment Framework (WBIF) favour railway infrastructure projects by facilitating investment grants?
Yanni Papapanagiotou: Until now there is no indication showing preference to specific transport modes, as long as the main requirements are met. In all WBIF sectors priority is given to projects with “regional” characteristics, meaning that two or more countries are benefited by the infrastructure project financed. Another requirement is that the project has the support by at least one of the International Financing Institutions and a third requirement is that the projects to be financed should be part of regional or national strategic documents, in other words they should be identified as priorities in the strategic planning phase. For the transport sector in particular, the main requirement is that any proposed projects / applications for grants, need to be part of SEETO (South East Europe Transport Observatory) Comprehensive Network and/or included in EC/SEETO policies. Exceptions to the Comprehensive Network may be considered for urban transport projects.
Railway PRO: Concerning this region, financial institutions constantly announce the allocation of funds for railway infrastructure projects. Moreover, there are countries in the region which gain the EU candidate statute and can thus benefit from funds for the railways, apart from the funds granted by international financial institutions. In this context, what problems and challenges do countries in the region face concerning the accession of financing and how could these problems be solved?
Yanni Papapanagiotou: Preparation of projects is indeed financed in many occasions by grants, but construction is mainly financed through loans by IFIs. The main problem in terms of financing is that most countries are reaching their borrowing limits. The total public debt of the Western Balkans region is still relatively moderate at around 53% of GDP, but fiscal space is limited due to pressures on national budgets and therefore limits the available funding for transport infrastructure investments. This fact makes prioritisation of projects absolutely a first priority, leading to the construction of the most necessary and viable ones.
Railway PRO: What is WBIF strategy on the financing of railway projects for the next period and what countries/projects are concerned? What are the key projects in this region to meet demand in rail transport between Europe and Asia?
Yanni Papapanagiotou: WBIF strategy is driven by Regional and National Strategies and the SEETO Multi-Annual Plan. SEETO has now established a new project ranking methodology, which is expected to assist towards a more rational prioritisation of railway projects in the Western Balkans region. All railway projects included in SEETO Comprehensive Network are gradually becoming part of TEN-T Network and as such, they will built to satisfy future EU demand, including Euro-Asian.
As for next period’s programming, this depends on beneficiary countries’ applications for funding, which are submitted in two “rounds” every year. There is no doubt that the main regional railway projects are Corridors X, VIII and Vc.
Railway PRO: What is the role of SEETO –South East Europe Transport Observatory Comprehensive Network in reviving the railway system in Western Balkans?
Yanni Papapanagiotou: SEETO Regional Cooperation is playing the most important role in the process of transport system development in the region, by focusing not only on infrastructure development, but also on horizontal measures. The development of SEETO Comprehensive Network up to TEN-T standards and its further integration in the European Transport System remains the main goal of SEETO and all of us who are working towards the transport sector development in the Western Balkans. The Comprehensive Network is providing priorities in the region, while the new project ranking methodology is important in identifying the main regional priorities, especially in these times of Europe’s financial crisis.
Railway PRO: In theory, a significant part of financial instruments grant special attention to railway infrastructure. However, figures show a clear discrepancy between road and railway transport. In your opinion, how could this be changed in favour of railways, as mode of transport that answers mobility and environmental challenges?
Yanni Papapanagiotou: In the past, more attention to road infrastructure has been paid all over Europe and not only in the Western Balkans region. Therefore I see this imbalance of financing as a pan-European issue, rather than as an exclusive Western Balkans issue. It is clear that European Commission is giving priority to the railway sector for a number of years now. A great deal of progress in the railway sector can be achieved by improving interoperability, by providing shorter border crossing times and by following integrated policies to attract more demand.
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