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COVID-19 Updates

Government Emergency Ordinance no. 52/2020 – Measures for Administration of European Funds in the Context of COVID-19 Pandemic

Publication: ZRVP

On April 21, 2020, Government Emergency Ordinance no. 52/2020 for the amendment of art. 293, paragraph (2) of the Government Emergency Ordinance no. 40/2015 on the financial administration of the European funds for the programming period 2014-2020, as well as for the adopting of measures regarding the beneficiaries of European funds in the context of spread of COVID-19 was published in the Official Gazette, Part I, no. 325.

In the context in which the COVID-19 pandemic and the instituting of the state of emergency in the territory of Romania may increase the risk of losing the funds allotted to Romania in the programming period 2014-2020, the legislative measures adopted are meant to deal with the risks and difficulties to which the economic operators who have accessed or who are accessing non-repayable funds are exposed during the state of emergency. At the same time, it has been noted that, in the current situation, measures are necessary to mitigate the risk of rescission of the financing agreements as a consequence of limited access of beneficiaries to the human resources necessary to prepare the documents for the accessing of European funds. Furthermore, it has been noted that it is necessary to ensure additional cashflow, to create stocks of raw matters and equipment related to the ongoing legal commitments.

The most important amendments adopted by the Government Emergency Ordinance no. 52/82020 are the following:

Pre-financing in installments of maximum 30%, as compared to the 10% provided by the old regulation

One of the most important changes adopted by the Government Emergency Ordinance no. 52/82020 envisages the pre-financing percentage provided by art. 15 of the Government Emergency Ordinance no. 40/2015. In this regard, the Government Emergency Ordinance no. 52/2020 provides that for a series of projects pre-financing shall be granted in installments of maximum 30% of the eligible value of the project, without exceeding the total eligible value of the financing agreement, previously the value of the instalments being of only maximum 10%.

These changes have in view especially any other beneficiaries than the ones provided by art. 6, paragraphs (1), (2), (21), (3), (4) and (6) of the Government Emergency Ordinance no. 40/2015, approved as amended and completed by Law no. 105/2016, provided that there are agreements for the acquisition of products, equipment and ongoing works.

In general, any beneficiaries excluded from the application of this measure are the institutions or units of the state, as well as the beneficiaries fully financed from the state budget, social insurance budget or the special fund budgets, the units functioning under the authority or coordination of the Ministry of Transport, Infrastructure and Communications or units functioning under the authority or coordination of the Ministry of the Environment, Water and Forests.

Any beneficiaries intending to avail themselves of these amendments shall submit the request for the granting of the pre-financing installment amounting to maximum 30% of the eligible value of the project accompanied by a substantiation note evidencing that the requested amounts are related to expenses necessary for the next 6 months, from the submission of the pre-financing request, according to the reimbursement schedule appended to the financing agreement.

Prolongation of the terms for the submission of the reimbursement application, for the verification of the request for payment

Further, considering the current context, when the activity of public institutions and economic operators is restricted, the Government Emergency Ordinance no. 52/2020 prolongs certain terms, as follows:

  • it increases the time interval in which beneficiaries/partnership leaders must submit the reimbursement application comprising the expenses made from the granted pre-financed installment, amounting to 50% of its value, from 90 days, as provided by art. 15, paragraph 4 of the Government Emergency Ordinance no. 40/2015, to 180 calendar days, calculated from the date when the management authority transferred the pre-financing installment into the beneficiary’s account, without exceeding the term of the financing agreement, with the mention that these provisions apply to the pre-financing applications submitted starting from the effective date of the Government Emergency Ordinance no. 52/2020, and namely April 21, 2020;
  • it increases from 20 to 30 business days the term in which the intermediary body/management authority checks the request for payment, a term calculated from the date of submission by the beneficiary/partnership leader of the request for payment, with the mention that these provisions apply also to the requests for payment and reimbursement applications registered with the management authority/intermediary body at the effective date of the Government Emergency Ordinance no. 52/2020, and namely April 21, 2020;
  • it increases from 10 to 20 business days the term in which the beneficiaries must submit the reimbursement application related to the request for payment to the intermediary body/management authority, which includes the amounts from the invoices settled by the request for payment, a term calculated from the date of collection of the amounts transferred by the management authority, with the mention that these provisions apply also to the requests for payment and reimbursement applications registered with the management authority/intermediary body at the effective date of the Government Emergency Ordinance no. 52/2020, and namely April 21, 2020.

All the above-mentioned measures apply starting from the effective date of Government Emergency Ordinance no. 52/2020, and namely April 21, 2020, and until the December 31, 2020.

Procedure of amendment of works contracts

Furthermore, the Government Emergency Ordinance no. 52/2020 also provides the procedure of amendment of works contracts, by addendum with the parties’ consent for the following two situations:

  • for the purpose of introduction of a contractual clause of upfront payment of the equipment and/or materials for their commissioning, in accordance with the object of the contract. In order to conclude an addendum to the works contract the contracts have to have been already signed, in the conditions in which the cost of the credit taken into account for a period of maximum 5 years that should have been contracted by the contractor to support 80% of the value of the equipment and/or materials paid in advance as compared to the initial provisions of the contract does not exceed the limit of 15% of the value of such works contract.
  • amendment by addendum should envisage the reduction of the minimum value of the interim payment certificates if a minimum value is established. This limit shall be selected by the beneficiaries depending on the specificity of the contracts, but this shall not be lower than the equivalent in lei of the amount of EUR 150,000 at the signing date of the addenda.

These procedures are valid starting from the effective date of the Government Emergency Ordinance no. 52/2020, and namely April 21, 2020.

To conclude here, in the current context, the amendments set forth by the Government Emergency Ordinance no. 52/2020 are welcomed for the business environment and for the good functioning of the projects financed by non-repayable funds. Nevertheless, their implementation may cause difficulties, as the Government Emergency Ordinance no. 52/2020 sets forth several derogations from the Government Emergency Ordinance no. 40/2015, which may put the process of identification of the applicable law in difficulty.

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BUSINESS CONTINUITY AT ZRVP

The COVID-19 crisis is fast-moving and hard to predict. At ZRVP, our highest priority is the health and wellbeing of our people, our clients and our communities.

Our response measures are aligned with the recommendations and decisions of the Romanian authorities and ensure the safety of our people and visitors as well as the continued provision of key client services and operations.

We would like to assure you that ZRVP will continue to operate seamlessly during the next period, both remotely and at our offices. We will provide continuous legal service to all our clients and assist you in the navigation of the wide range of legal and economic impacts of COVID-19 that are leading to uncertainty and volatility across all sectors. We are closely monitoring the situation as it evolves and will provide up-to-date information related to the wide range of issues arising during this challenging time.

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Kind regards,
Your ZRVP team