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Latvia seeks solutions to rapidly absorb EU funds: LTV's De Facto

Fears that several tens of millions of euros of European Union (EU) funds could be lost have just been faced by Stradiņš Hospital, whereas Cohesion Fund money not spent on transport projects has been reallocated to cover last winter's heating bills. Rapid maneuvers and redistribution of money are ongoing due to the fact that EU funds of the previous period must be invested by December 31 this year, Latvian Television's De Facto reports October 15. 

Hospital funding

Stradiņš Hospital's new building should have been ready for the staff to move in by now. Although the equipment ordered for the new building gradually arrives, it still does not even have windows. Completion of the building was first moved to spring next year, but it is now unclear whether it will even be finished by next October.

The building is being developed with the support of EU funds from the previous period. That money must be spent by the end of the year. Otherwise, around €46 million may be lost. The construction costs of the future hospital building amount to around EUR 101,597,200.

The agreement with the construction company Velve foresaw a plan to carry out construction work for 59 million euros this year. Yet in the first half of the year, the work nearly stopped.

Although an agreement was reached to cover the costs and an advance was paid, the pace did not rise. This year, only two and a half million euros have been spent.

"One where we absolutely don't want to make compromises is the quality of the construction of this facility or the risk of that quality falling. Because, builders say, we invite you to go to compromises, and compromises are often the speed, the quality, the documentation of different solutions, and different calculations that are not submitted in time and that may endanger the quality of the construction project further afield,” said the hospital's board chairman Rinalds Muciņš.

Velve, on the other hand, said that more has been built than hospital representatives mention, but there are delays in payments from the hospital, preventing the pace from rising.

Relations between the two sides have tensed to such an extent that even a mediator is attached to the mutual negotiations.

If the building is completed by early winter to the point of starting the interior work, there are hopes of reducing the amount of potential damage.

Solutions to the more efficient use of EU funds also had to be sought by the Rīga Eastern Clinical Hospital. Of the remaining 40 million, 24 are planned to be spent by the end of the year.

It is promised to complete a connection between two hospital buildings, a chemotherapy outpatient clinic, and a patient admissions clinic, and buy equipment. There would be around €16 million left behind - the ongoing reconstruction of the Gaiļezers hospital building is divided into stages and will continue until next year, financed from the new funds.

Major concerns in the transport sector

The report on progress in the last period's European fund investment use, which was viewed by the Cabinet of Ministers on September 26, indicates that risk financing or money that might not be used as planned by the end of the year is half a billion or EUR 578.4 million.

Of that, 125 million have been frozen due to various audits, investigations, and inspections.

But of the rest of the risk finance, transport sector projects were the biggest concern - by a total of 259.4 million. It is followed by health with 103.4 million, as well as environment and regional development - with nearly 58.1 million.

In the transport sector, one of the concerns are the still undelivered trains and unfinished railway infrastructure of Latvia, including platforms

60 million of the Cohesion Fund, which is clearly not going to be used by the transport sector, will go to the budget to cover expenditure on last year's support for energy expenditure for vulnerable households.

“The European Commission then authorized the use of this money from its investment envelopes for such purposes. We had the opportunity from our budget to do so, but now we see that it is necessary that we make full use of these European funds, then we apply such a solution,“ said Ints Dālderis, advisor to the Finance Minister (New Unity).

On the other hand, in the environmental field, four landfills have not yet managed projects for bio-waste treatment plants. But in five cases, local governments have not succeeded with revitalization plans, one of them – Rīga's attempt to develop a park in the Skanste neighborhood.

Unlike the major hospital or transport projects, these will have to be finished with state money next year but without losing what has already been invested.

The Ministry of Finance notes that Latvia, compared to "several other European Union countries", is not experiencing huge difficulties with the absorption of funds. Although there have been suggestions from several countries to allow the use of money from the past period to be extended further, the donor countries have not agreed.

In the period 2014-2020, the allocation of European Union funds to Latvia was EUR 4.64 billion.

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