Small municipalities around Bulgaria lack capacity to prepare projects and apply for EU structural funds.

This was the main conclusion made by participants at a round-table discussion on the absorption of EU funds on April 3 in Sofia. The discussion was organised by Bulgaria's Ministry for Regional Development (MRDPW), the United Nations Development Programme (UNDP) and the British embassy in Sofia. The event marked the closure of the joint MRDPW/UK Embassy/UNDP project "Strengthening municipal capacities for the identification and preparation of partnership projects to be funded by the Structural Funds". The project was worth 123 000 euro and was financed by the UK embassy. It took 16 months to complete.

Participants agreed that the only solution to the problem is co-operation among local authorities in small municipalities. Of 92 municipalities that participated in a survey carried out by the MRDPW and the UNDP, 76 managed to prepare a project, but only 58 were found to be good enough to receive EU funding.

At the same time, the research established that bigger municipalities have the necessary institutional capacity to carry out projects, but lack enough information, according to the UNDP. Businesses failed so far to show interest in participation in the preparation of financial offers as the companies were afraid to get involved in conflicts of interests, Darik Radio reported.

Snezhina Slavcheva, Director of Directorate for Implementation of Programme Projects at the MRDPW, said that the largest number of developed projects were in the field of sustainable development of tourism - 30, and in sustainable and integrated urban development - 17. The projects of the municipalities of Haskovo, Dobrich, Silistra, Straldja, Isperih, Razgrad, Montana, Berkovitsa, Lovech, Loukovit, Turgovishte, Pazardjik and Stara Zagora have been evaluated as "good", Slavcheva said. This however does not mean that projects would actually lead to gaining financing. They were mostly in the field of tourist infrastructure and the development of tourist products, marketing and promotion, Slavcheva added.

Insufficient co-operation among municipalities was identified as the main reason for the negative findings about preparations by municipalities. This was said by UNDP Programme Director Hashmi Bahlul, as quoted by Bulgarian news agency BTA. In the absence of partnerships, small municipalities will not be able to obtain funding from structural funds, Bahlul said. Another shortcoming is that most municipalities have not identified the municipal services with potential for public-private partnerships. On the other hand, business tends to underestimate the advantages of project partnerships and fears, that according to European criteria, a company taking part in the development of projects does not have the right to take part in their implementation, Bahlul said.

The executive director National Association of Municipalities (NAM), Ginka Chavdarova, told The Sofia Echo that many municipalities were not included in the joint MRDPW/UK embassy/ UNDP project. Moreover, the latter had more of an educational aim. The projects that municipalities had to prepare as if to apply for EU funding were as an exercise, which resulted in lower motivation by some municipalities.

According to Chavdarova, the readiness of small municipalities to prepare projects and apply for EU funds should not be measured according to their administrative capacity or the qualifications of their staff. Of course it is more difficult for smaller municipalities, which have fewer employees than bigger ones, which may have whole teams dealing only with EU projects, Chavdarova said.

"But that is why we encourage co-operation between municipalities, NGOs and business. Some municipalities do it, especially with NGOs. But more co-operation is needed," she said.

Chavdarova said that many municipalities were already at a project-managing stage rather than preparing for projects. A lot of projects have already been prepared, approved, and finance had been received from pre-accession funds.

The main problems and risks, especially for small municipalities, come indeed when the project has already been won, Chavdarova said. This is not because of lack of administrative capacity, but because small municipalities are often poor. She said that when applying for finance based on projects, municipalities must first pay the expenses themselves and only within completion of the project they get the money back from EU funds based on strict accounting. Thus, should something in the accounting go wrong, the municipality would not get its money back. "For small and poor municipalities not being refunded even only five per cent of the entire sum, might be devastating," Chavdarova said.

Asked whether the NAM has received complaints from some municipalities about either lack of information on project development, Chavdarova said that two years ago NAM used to receive a lot of worried phone calls. Now, she says, things had drastically improved. The theory of what EU funds are, and how municipalities can benefit from them, has for the most part been learnt. "Currently, the complaints and worries that come through to us are mostly related to deadlines and forms for application - practical issues," Chavdarova said.