Preliminary assessment of the second payment request of Romania

27 June 2023 Positive preliminary assessment of the satisfactory fulfilment of milestones and targets related to the second payment request submitted by Romania on 16 December 2022, transmitted to the Economic and Financial Committee by the European Commission. Executive summary In accordance with Article 24(2) of Regulation (EU) 2021/241, on 16 December 2022, Romania submitted a request for payment for the second instalment of the non-repayable support and the second instalment of the loan support. The payment request was accompanied by the required management declaration and summary of audits. To support its payment request, Romania provided due justification of the satisfactory fulfilment of the 29 (twenty nine) milestones and targets of the second instalment of the non-repayable support and the 20 (twenty) milestones of the second instalment of the loan support, as set out in Section 2.1.1 and Section 2.2.1 of the Council Implementing Decision of 3 November 2021 on the approval of the assessment of the recovery and resilience plan for Romania1. For 3 (three) targets covering a large number of beneficiaries, in addition to the summary documents and official listings provided by Romania, Commission services have assessed a statistically significant sample of individual files. The sample size has been uniformly set at 60 which corresponds to a confidence level of 95% or above in all cases. Upon receipt of the payment request, the Commission has assessed on a preliminary basis the satisfactory fulfilment of the relevant milestones and targets. Based on the information provided by Romania, the Commission has made a positive preliminary assessment of the satisfactory fulfilment of all 29 milestones and targets related to the second instalment of the non-repayable support, and of 20 out of 22 milestones and targets related to the second instalment of the loan support. Romania has not currently provided the necessary information for the Commission to reach a positive preliminary assessment on milestone 129 or on milestone 133. For these milestones, the Commission will proceed in accordance with Article 24(6) of Regulation (EU) 2021/241. In its payment request, Romania has confirmed that measures related to previously satisfactorily fulfilled milestones and targets have not been reversed. The Commission does not have evidence of the contrary. This includes the commitments on audit and controls undertaken in the context of the first payment request by Romania in relation to milestone 450 (Monitoring and implementation of the plan) to ensure continuous compliance with this milestone and its obligations under the Financing and Loan Agreements. Based on the documentation submitted and the controls carried out by the Commission, Romania has improved the system’s functionalities and efficiency. For past contracts, the European Central Platform for identifying beneficial owners of foreign companies to a great extent was not available due to the fact that very few Member States have connected by now. In one case, the origin country of the foreign beneficial owner was connected to the Platform, but there was no data available for that company. Romania nevertheless demonstrated its effort to use it, by accessing the Platform and searching for the required information. For all contracts signed 1 ST 12319/21. 1 from 24 August 2022 and until the European Central Platform is fully available, the system currently in place continues to be applicable (Compliance with Law 129/2019, as amended, use of a self- declaration under the penalty of Criminal Code by final recipients/contractors at the moment of applying and application of Guidelines prohibiting coordinators from signing any further contracts in the absence of complete beneficial owners’ data). Concerning the collection of beneficial owners’ data of foreign companies, the National Trade Registry (ONRC) and other authorities provided all the necessary information for all contracts signed before 24 August 2022 and sent proofs thereof to the Commission. The Ministry for Investment and European Projects ensured that data received from the ONRC and additional information requested to, and received from, contractors was entered into its repository system e_SMC and informed the European Commission thereof. On the basis of the evidence submitted, the Commission considers that Romania has ensured continuous compliance with the milestone and with its obligations under the Financing and Loan Agreements. The milestones and targets positively assessed as part of this payment request demonstrate significant steps in the implementation of Romania’s recovery and resilience plan. This includes, among others: sustainable transport, decarbonisation and road safety, replacement of coal in the energy mix, improving tax and tax administration processes, stepping up the fight against corruption, and reform of the compulsory education system to prevent and reduce early school leaving. The milestones and targets also confirm progress towards the completion of investment projects related to government cloud architecture, increased capacity to undertake investments in health infrastructure, improving tax and tax administration processes, including through the implementation of integrated risk management, and supporting educational establishments with high risk of drop-outs. By the transmission of this positive preliminary assessment and in accordance with Article 24(4) of Regulation (EU) 2021/241, the Commission asks for the opinion of the Economic and Financial Committee on the satisfactory fulfilment of the relevant milestones and targets. 2 Contents Contents ...................................................................................................................................... 3 [Non-repayable support] .............................................................................................................. 6 Related Measure: Sustainable transport, decarbonisation and road safety / Road safety ............... 6 Related Measure: Electricity market reform, replacement of coal in the energy mix and support for a legislative and regulatory framework for private investment in renewable electricity production .................................................................................................................................................. 11 Related Measure: New capacities for electricity generation from renewable sources ................... 13 Related Measure: Development of a unitary framework for defining the architecture of a government cloud system .......................................................................................................... 15 Related Measure: Development of a unitary framework for defining the architecture of a government cloud system .......................................................................................................... 17 Related Measure: Development of a unitary framework for defining the architecture of a government cloud system .......................................................................................................... 19 Related Measure: Transition to EU 2025 connectivity targets and stimulate private investment for the deployment of very high-capacity networks.......................................................................... 22 Related Measure: Deployment of the Government Cloud Infrastructure ..................................... 25 Related Measure: Reform of the National Agency for Fiscal Administration (ANAF) through digitalisation .............................................................................................................................. 28 Related Measure: Reform of the National Agency for Fiscal Administration (ANAF) through digitalisation .............................................................................................................................. 29 Related Measure: Improving the budgetary programming mechanism ........................................ 32 Related Measure: Reform of the public pension system .............................................................. 35 Related Measure: Increased capacity to undertake investments in health infrastructure ............. 40 Related Measure: Increased capacity for health management and human resources in health ..... 44 Related Measure: Increased capacity for health management and human resources in health ..... 48 Related Measure: Introduction of work cards and formalisation of work in domestic work .......... 50 Related Measure: Enhancing the predictability and efficiency of decision-making processes by strengthening the capacity for policy coordination and impact analysis at the level of the government and coordinating ministries, as well as by strengthening the tools to increase the quality of public consultations at all levels of the administration................................................. 52 Related Measure: Enhancing the predictability and efficiency of decision-making processes by strengthening the capacity for policy coordination and impact analysis at the level of the government and coordinating ministries, as well as by strengthening the tools to increase the quality of public consultations at all levels of the administration................................................. 57 Related Measure: Strengthening coordination at the centre of government through an integrated and coherent approach to climate change and sustainable development initiatives..................... 60 Related Measure: Ensuring the independence of the judiciary, enhancing its quality and efficiency .................................................................................................................................................. 63 3 Related Measure: Ensuring the independence of the judiciary, enhancing its quality and efficiency .................................................................................................................................................. 67 Related Measure: Stepping up the fight against corruption ......................................................... 70 Related Measure: Reforming the national procurement system .................................................. 74 Related Measure: Construction, equipping and operationalisation of 110 crèches ....................... 75 Related Measure: Supporting educational establishments with high risk of drop-outs ................. 78 Related Measure: Adoption of the legislative framework for the digitalisation of education ........ 82 Related Measure: Adoption of the legislative framework for the digitalisation of education ........ 84 Related Measure: Updated regulatory framework to ensure environmentally friendly design, construction and endowment standards in the pre-university education system ......................... 89 Related Measure: Reform of the governance of the pre-university education system and professionalisation of management ........................................................................................... 92 [Loan component]...................................................................................................................... 94 Related Measure: Strengthening the regulatory framework for the sustainable management of the water and wastewater sector and accelerating public access to quality services under European directives ................................................................................................................................... 94 Related Measure: Reform of the management system for protected natural areas through coherent and effective implementation of the European Biodiversity Strategy Reform of the management system of protected natural areas for the coherent and effective implementation of the European Biodiversity Strategy............................................................................................. 96 Related Measure: Establishment of a Renovation Wave fund to finance works to improve the energy efficiency of the existing building stock ........................................................................... 99 Related Measure: Establishment of a Renovation Wave fund to finance works to improve the energy efficiency of the existing building stock ......................................................................... 103 Related Measure: Establishment of a Renovation Wave fund to finance works to improve the energy efficiency of the existing building stock ......................................................................... 107 Related Measure: Establishment of a Renovation Wave fund to finance works to improve the energy efficiency of the existing building stock ......................................................................... 112 Related Measure: Ensuring energy efficiency in the industrial sector ......................................... 116 Related Measure: Schemes to upskill/reskill employees in firms ............................................... 119 Related Measure: Financial instruments for the private sector - Fund for digitalisation, climate action, and other areas of interest............................................................................................ 121 Related Measure: Investment 3.1 Private sector aid schemes – Aid schemes for the digitalisation of SMEs ....................................................................................................................................... 126 Related Measure: Cross border and multi-country projects – Low Power Processors and Semiconductor Chips ............................................................................................................... 129 Related Measure: Creating the policy framework for sustainable urban transformation — Romania’s Urban Policy............................................................................................................ 134 Related Measure: Improving housing quality ............................................................................ 137 Related Measure: Operationalisation of Destination Management Organisations (DMOs) ......... 140 4 Related Measure: Operationalisation of Destination Management Organisations (DMOs) ......... 142 Related Measure: Promotion of the 12 touristic/ cultural routes ............................................... 144 Related Measure: Framework for the operationalisation of cycling routes at national level ....... 147 Related Measure: Reform 2. Framework for the operationalisation of cycling routes at national level ........................................................................................................................................ 150 Related Measure: Improvement of the social economy legislation ............................................ 151 Related Measure: Digitisation of universities and preparation for the digital professions of the future ...................................................................................................................................... 153 5 [Non-repayable support] Related Measure: Sustainable transport, decarbonisation and road safety / Road Number: 65 safety Name of the Milestone: Adoption of the National Road Safety Strategy Qualitative Indicator: Adoption of the Strategy by Government Decision Time: Q2 2022 (secondary legislation) and start of its implementation Context: Milestone #65 is part of reform C4.R1, which aims to support the transition towards sustainable and smart mobility in Romania. The reform consists of six sub-measures, related to: (i) introducing taxation in line with the “polluter pays” principle; (ii) constructing alternative fuels infrastructure; (iii) adopting a strategy on national road safety; (iv) adopting a strategy and related legislative package to develop intelligent transport systems; (v) adopting a strategy for railways infrastructure development and to strengthen rail traffic management; and (vi) adopting a shipping strategy. These reforms are also linked to reforms taken at a local level in a separate component of the plan. In particular, the milestone is part of the sub-measure on road safety. Milestone #65 concerns the adoption of a National Road Safety Strategy 2021-2030, which includes measures linked to: (i) safety inspection, (ii) the development of databases on road safety features, (iii) the introduction of more stringent speed limits and the increase of the enforcement of penalties for offences, (iv) a strategy on the elimination of black spots. A strategic document for intelligent transport systems (ITS) will also be approved by the Romanian government in the context of this milestone. Milestone #65 is the first step in the implementation of the sub-measure on road safety and will be followed by milestone #66 on the entry into force of the road safety law, target #67 on the equipment to increase speed enforcement and compliance with rules, and target #68 on reducing the number of road accident victims. The reform has a final expected date for implementation in Q1 2026. Evidence provided: In line with the verification mechanism set out in the operational arrangements, the following evidence was provided: i) Cover note duly justifying how the milestone (including all the constitutive elements, proving the start of the implementation) was satisfactorily fulfilled. ii) Government Decision No. 682 on the adoptio