Preliminary assessment of the first payment request of Romania

report on the compliance with the DNSH principle. Commission Preliminary Assessment: Satisfactorily fulfilled

                  Related Measure: Financial instruments for the private sector - Energy efficiency
Number: 259
                  investment in the residential and buildings sector
Name of the Milestone: Signature of the contribution agreement between the European
Commission and the Romanian Government
Qualitative Indicator: Agreement signed                                          Time: Q4 2021
Context:
The objective of this sub-investment is to deliver finance and investments for energy efficiency and
renewable energy in the residential and buildings sector. The investment shall take the form of a
portfolio guarantee, to be implemented as a contribution to InvestEU by the European Bank for
Reconstruction and Development (“EBRD”).

The signature of the Contribution Agreement is the steppingstone for the implementation of the investment C9.I2e. The Contribution Agreement allows Romania to contribute the dedicated funds to the InvestEU Programme, managed at EU level, which are then provided as a guarantee to attract private investments in the country via financial intermediaries (also known as “Member State Compartment”). Following the signature of the Contribution Agreement, and following the signature of the guarantee agreement (not covered by this milestone), 50% of the total amount of resources shall be approved by the InvestEU Investment Committee by Q2 2023 (Milestone 260), and the rest by Q2 2024 (Milestone 261). Evidence provided:

In line with the verification mechanism set out in the Operational Arrangements, the following evidence was provided:

1. Summary document duly justifying how the milestone (including all the constitutive elements) was satisfactorily fulfilled, including references to the relevant provisions. 2. A copy of the signed Contribution Agreement. The Contribution Agreement defines all the financial instruments covered by Milestones 247, 250 and 259. Details about the characteristics of sub-investment C9.I2e can be found under Clause 11.2 and under Annex 4, Part 3.

The authorities also provided: 3. A Memorandum of Understanding signed by Ministry of Investments and European Projects and the Ministry of Finance and addressed to the Secretary General of the Government of Romania. The MoU introduces and justifies the signature of the Contribution Agreement. 4. A note prepared by the implementing partner including information on the number of beneficiaries the financial instrument is expected to support. Analysis:

In its summary of audits (issued in April 2022), the Romanian Auditing Authority could not prove the satisfactorily achievement of the milestone because the Contribution Agreement had not been finalised at that stage yet. As a result, the Authority reported that the following legal provisions were not complied with: Article 5(1) of the Loan Agreement signed between the European Commission and Romania in 15.12.2021; Article 5(4) of Government Emergency Order No nr.124/2021. The signature of the Contribution Agreement between the European Commission and the EBRD on 24 May 2022 makes Romania compliant with those provisions.

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