On 1 June 1994, the Commission adopted a communication for the ECOFIN Council on 6 June 1994 on financing trans-European networks (TENs). The communication concentrates on financing issues in the transport and energy sectors and draws on the work of the Christophersen Group, the European Investment Bank (EIB), and contacts between the Commission services and other financial institutions. It also presents some preliminary considerations with respect to projects in the field of telecommunications where discussions on specific projects are not so advanced. It does not cover the financing of TEN investments outside the Union territory. The Christophersen Group has emphasized that all priority transport and energy projects must satisfy the test of economic viability. They should contribute to the competitiveness and technological development of the Community's economy. Few of the transport projects are likely to satisfy this test of pure financial viability which means that some form of public support will be required. The Commission therefore considers that the existing sources of finance will not be sufficient to cover all the financing needs of the TEN programmes. Concern about the availability of adequate finance is based on analysis of the ten most mature priority transport projects. Total costs for these projects amount to between ECU 4 and 6 billion a year up to 1999, depending on the phasing of expenditure. On different assumptions about public and private sector contributions, a potential shortfall of ECU 7 to 20 billion could occur. Given the constraints on public budgets which limit the scope for direct financing of investment by the public sector, the rapid realization of the TEN programmes will demand recourse to different forms of partnership between private and public sectors. Apart from easing the burden on public budgets, private participation should introduce competitive mechanisms, thereby improving cost-effectiveness in project planning, construction and operation. Possible forms of private involvement are: as a shareholder, as operator of the project under a concession, as a risk-sharing contractor or as a provider of debt finance. As far as grant support is concerned, Member States themselves will provide the vast bulk of the necessary funding. For the ten most mature transport projects, this will probably amount to ECU 15 to 20 billion over the life of the projects (or between one fourth and one third of total investment cost). According to Title XII of the EC Treaty, the Community has a specific and complementary role in providing financial support for TENs. The Commission has already proposed a Financial Regulation covering annual expenditure of about ECU 300 million for feasibility studies and interest subsidies for loans and guarantees. TEN projects in eligible regions are also supported by the European Research and Development Fund and the Cohesion Fund. At Community level, the EIB will be the largest single source of finance for TENs. In 1993, it lent some ECU 7.5 billion to projects of Community interest in transport, energy and telecommunications. The European Investment Fund (EIF) will work with the private sector and with public/private partnerships in helping to allocate and manage risks. The possibility of increasing EIB and EIF involvement could be envisaged as a way to counter the financing gap. Should new financing mechanisms at Community level be needed, measures should be designed so as to avoid an overlap with existing Community institutions. The Commission should not become a financial institution, but provide complementary fund raising on capital markets for specific purposes. In addition, any measure should respect the Edinburgh ceilings for the Community budget. Two broad options for capital market funding at Community level could be envisaged: - Special guarantees underwritten by the Community budget. Such guarantees could be made available to loans for specific projects co-financed by the EIB. - Fund-raising by the Community itself on the capital markets so as to co-finance, with the EIB, loan packages to individual priority projects where other financing sources are not available. The proceeds of Community loans would be managed by the EIB on behalf of the Community. In both cases, operations would take place within pre-determined ceilings, in partnership with the EIB and the EIF, and only after a case-by-case Council decision on support for individual projects. The Commission intends to develop these ideas further in the light of the views of the Council, the EIB and the EIF, and taking fully into account the results of the detailed discussions on the priority projects still under way. It considers that it is vital for Community competitiveness to ensure that there are no financial obstacles to the acceleration of these projects. It will therefore put forward the necessary proposals when evaluation of the priority projects is completed.