JESSICA to Come to Bulgaria Soon

According to the Bulgarian Minister for Regional Development, Rosen Plevneliev, the JESSICA initiative in Bulgaria will have a strict accountability. Photo by BGNES

The Joint European Support for Sustainable Investment in City Areas (JESSICA) will be implemented in seven big cities in Bulgaria.

Sofia, Plovdiv, Stara Zagora, Burgas, Varna, Ruse and Pleven will enjoy the BGN 65 M, which will come from the European fund for regional development and will be managed by the European Investment Bank (EIB).

Unlike the other projects, financed by the operational program “Regional Development”, these money will not be granted for free. It will be operated through a holding fund, which will give it to the businesses and municipalities. It will then need to be given back with an interest and after that given to new business projects.

The idea of the program is to have a multiplier effect on urban development. In this way, the resource could be used after this program's end in 2013.

However, before the money gets to the businesses and the effect of the program is felt by these cities' residents, some steps needs to be done.

The first step, which is the signing of a three-year financial agreement for the creation of a holding fund with EIB, is already done. The document should now be ratified in the Bulgarian Parliament.

After that, the managing authority of operational program “Regional Development” should transfer EUR 33 M to the EIB account, which is managed by the fund.

With the money, EIB will create two separate funds for urban development. One of them will be for Sofia and will include BGN 26 M. The rest BGN 39 M will be shared by the other six cities.

By the end of the year, EIB will provide the application documents for the managing position for the two funds. Banks, investment companies, financial companies could apply for the position.

By the end of March 2011, the results will be announced.

“The businesses will be able to apply for funding in May-June 2011 the earliest,” Denitsa Nikolova, head of the Directorate General of the “Program for Regional Development” in the Ministry for Regional Development told the Bulgarian daily “Dnevnik”.

The main requirement for the receiving funding is for the projects to be included in an integrated plan for urban development. They should also meet the eligible activities under the part “Sustainable and Integrated Urban Development” of the operational program.

The projects will also have to generate profit in order to be able to bring back the money to the fund. The funds will be invested in the form of equity in the project, loans or bank guarantees.

The Bulgarian Minister for Regional Development, Rosen Plevneliev, has stated that examples of projects, realized under the JESSICA initiative, could be multifunctional culture halls and cinemas, commercial areas, sports facilities, business in industrial areas, parking lots and other infrastructure that is needed in the city.

“If a project for constructing a commercial area receives funding, it must also envision finishing of the area, like creation of green areas, playgrounds for children or other recreational facilities and entertainment,” Denitsa Nikolova said.

The VP of the European Investment Bank, Matthias Kollatz-Ahnen, has stated that money could also be granted to projects that have not received EU funding as long as they meet the requirements of the Fund.

The municipalities or the businesses could apply with projects. The other option is for the municipality to work on a joint project with a private company.

The spending of the funding will be double-checked – once by the managing authority of the operational program “Regional Development” and second time by an investment council, appointed by the Minister for Regional Development.

The investment council will include five deputy MPs - three deputies of Plevneliev, plus two more from the Ministry of Economics and Agriculture.

“The aim is to have a strict accountability,” Plevneliev said.

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