News Content

Auditor: EU maritime spending wasteful, ineffective and 'incoherent'

THE big spending EU wasted much money on needless duplication because of a failure to assess port infrastructure needs, said the European Court of Auditors (ECA).

The ECA said much of the EUR10 billion (US$10.1 billion) spent and the maritime transport, ports and freight investment strategies EU and member states was "ineffective and unsustainable".

From 2000-2013, EUR6.8 billion was earmarked for investment in ports, to which was added loans of EUR10.1 billion from European Investment Bank, reported Lloyd's Loading List.

Investments in port infrastructures are eligible for EU co-financing through the European Regional Developments Fund (ERDF) and the Cohesion Fund (CF) under shared management, but also through the Trans-European Networks-Transport (TEN-T) and the Connecting Europe Facility (CEF) under the direct management of the European Commission.

The ECA assessed the European Commission's and member states' EU maritime freight transport strategies and the value for money delivered by EU-funded investments in ports" examining 37 new projects and five re-assessed projects.

"Overall, our audit found that the long-term port development strategies put in place by the member states and the [European] Commission did not provide a robust and coherent basis for planning the capacity needed in EU ports and for the necessary EU and national public funding for port infrastructures," the ECA said.

A failure to adequately assess port infrastructure needs had led to duplication of infrastructure in "neighbouring ports" - EU ports that are relatively close to each other geographically - the ECA said.

For example, Cadiz and Algeciras each received large amounts of EU money to fund the same facilities. Asked the ECA: "Is this an efficient and effective use of public money?"

The ECA said that funding in similar port infrastructure and superstructures in neighbouring ports has led to ineffective and unsustainable investments.

"Based on 30 of the 37 projects examined and already completed between 2000 and 2013, one in every three euros (corresponding to EUR194 million for 12 projects) has been spent ineffectively so far.

"Around half of this funding (EUR97 million of EU funding for nine projects) was invested in infrastructure, which was not used or were heavily underused for more than three years after the works ended. This highlights shortcomings in the ex ante needs assessment and indicates a high risk of the amounts invested being wasted."

The ECA said this observation also applied to the five re-assessed ports already examined in 2010.

"This reassessment did indicate poor value for money overall: the use of the EU-funded capacity for these ports was still inadequate after almost a decade of operations," said the ECA.

"The port areas in four ports were still at a very low level or empty. Overall, EUR292 million of the investments was considered to have been spent ineffectively."

Cost overruns and delays are further illustrations of inefficiencies in the examined investments in port infrastructures, said the ECA.

"Overall, the EU-funded projects examined had cost overruns of EUR139 million," the report said. "Moreover, 19 of the 30 completed projects faced delays, out of which 12 were delayed by more than 20 per cent of the planned project duration."

Of the seven projects - totalling EUR524 million - not yet completed at the time of the audit - six were also delayed.

The ECA also highlighted the investment projectsˇ ¨many missing and inadequate links to hinterlands, such as missing road and rail connections", which "will need further public funding to make the initial port investments work properly".

Auditors also said the European Commission had not taken the necessary actions "in the area of state aid and customs procedures to enable ports to compete on a level playing field."

The ECA calls for an assessment into the possibility of excluding EU funding for port infrastructure for container transshipment and storage (for example, the construction of quays, docks and storage capacities) during the 2014-2020 period.

"In addition, superstructure which are not within the public remit should be excluded from EU funding, as these should be considered a commercial environment," the report said.