Cyprus - Operational Programme 2007-2013: Sustainable Development and Competitiveness

MEMO/07/462

Brussels, 15 November 2007

Cyprus - Operational programme 2007-2013: Sustainable Development and Competitiveness

1. "Sustainable Development and Competitiveness" 2007-2013, Programme under Convergence and Regional Competitiveness and Employment objective, co-funded by Cohesion Fund (CF) and European Regional Development Fund (ERDF)

N.B: The application of the acquis is suspended in the areas in which the Government of the Republic of Cyprus does not exercise effective control

Cyprus is eligible under both the Convergence objective (Cohesion Fund), and the Competitiveness objective ("phasing-in" support)

2. The European Commission approved on 17 September 2007 a regional development programme, the Operational Programme "Sustainable Development and Competitiveness" for the period 2007-2013. This programme involves Community support for Cyprus within the framework of the "Convergence" and "Regional Competitiveness and Employment" objectives. The total budget of the programme is around € 579.6 million and the Community investment through the ERDF and the CF amounts to € 492.6 million (approximately 77 % of the total EU money invested in Cyprus under Cohesion policy 2007-2013).

3. The purpose and aim of the EU investment

The Operational Programme foresees investments in necessary environment and energy infrastructure, in order to ensure that the country is able to meet its obligations as laid down in the EU body legislation ("acquis communautaire"). New transport infrastructure is also planned, with a view to improving the country's links with the outside world. It looks to enhance competitiveness through the expansion and strengthening of high value added activities, mainly by providing support to research and businesses, in particular SMEs, in a variety of sectors, including health and tourism. There is also a territorial dimension to the Programme, with investments aimed at improving the quality of life and level of economic activity in both rural and urban areas.

4. Priorities and expected impact of the investment

The strategic objective of the programme is the improvement of the competitiveness of the economy within conditions of sustainable development. This will be achieved through three interrelated general objectives which are: (1) Improving the attractiveness of the country, through the creation and upgrading of basic infrastructure; (2) Promoting the knowledge society and innovation and improving the productive environment; and (3) Creating sustainable communities in urban and rural areas.

The programme is structured into the following seven priorities:

Priority 1: Basic Environment and Energy Infrastructure (Cohesion Fund)

The interventions in the environment sector will concentrate mainly on infrastructure that is necessary to ensure the rational management of waste, as well as the promotion of Renewable Energy Sources (RES). New infrastructure will safeguard the rational management of environmental resources, with particular emphasis on compliance with the "acquis communautaire" in the fields of solid waste management through the creation of two sanitary landfill sites. Importance will also be given to the management of water resources. Additionally, interventions in the energy section aim at exploiting the opportunities for energy saving, as well as reducing the reliance of fossil fuels through the increased use of renewable energy sources (the share of RES over total energy consumption will increase from 4.5% to 9% over the seven year period).

Priority 2: Basic Transport Infrastructure (Cohesion Fund)

The focus is on the one hand on upgrading the island’s port infrastructure (Limassol), and on the other on the road network which is part of the Trans-European Networks (ΤΕΝ-Τ-road works) and, in particular, those parts which connect the country's entry gates to major urban centres. This will improve the country’s accessibility and the ability of businesses to access EU markets. Upgrading port and road infrastructure will result in cost and time savings in the transportation of goods and passengers, as well as mitigating the environmental burden. These investments will improve Cyprus’ competitiveness and boost the growth of the economy.

Priority 3: Knowledge Based Society and Innovation (ERDF)

Under this priority, the programme aims to improve the conditions for innovation and links between research and the productive base, in order to strengthen the economy's competitiveness. Priority will be given to increasing research activity, strengthening cooperation between the country's productive units and research centres, increasing research and technological development (RTD) expenditure, as well as promoting innovation. A specific objective aims to utilise the opportunities offered by Information and Communication Technologies (ICTs) for the achievement of digital convergence, giving priority to the sectors of e-government, e-health and e-commerce. Lastly, and in complementarity with interventions to be implemented under the Operational Programme ‘Employment, Human Capital and Social Cohesion’, focused interventions will also relate to the development of sufficient infrastructure in tertiary education. - Expenditure on RTD should increase to 1% of GDP.

Priority 4: Productive Environment (ERDF)

The main objective is the long- term improvement of the productive environment, aiming at the improvement of the country’s competitiveness. This will be achieved through interventions directed at encouraging local enterprises in the manufacturing and service sector, producing products and services of high added value, diversifying the productive base of the economy and enhancing entrepreneurship. In the framework of strengthening enterprises, services to support SMEs will be provided and their financing will be facilitated, along with the further development of entrepreneurship with particular focus placed on specific target groups such as women and youth. In relation to the general aim of boosting competitiveness, emphasis will be placed on the tourism sector. Overall, it is estimated that the Programme should contribute to the creation of 364 new businesses and result in 1158 new jobs.

Priority 5: Regeneration of Urban and Rural Areas (ERDF)

The central aim of this priority is the creation of "sustainable communities in urban and rural areas". As far as urban areas are concerned, interventions will focus on the four main urban centres of Nicosia, Larnaca, Limassol and Paphos. Regeneration and the improvement of quality of life will be achieved through improvements in the urban environment, the attraction of businesses to stagnating parts of the cities, the creation of a sustainable public transport system, as well as the construction of a multi-purpose cultural centre. Interventions in rural areas will be directed at improving the accessibility of villages, bringing residents closer to necessary services as well as attracting and developing entrepreneurship in these areas. The regeneration of the settlements in mountainous areas will also continue the work commenced under the programming period 2004-2006.

Priority 6: Technical Assistance for the ERDF

There is also provision for technical assistance, for the implementation of the interventions financed under the European Regional Development Fund (ERDF). Financial support is available covering administration, communication activities, monitoring, evaluation and control.

Priority 7: Technical Assistance for the Cohesion Fund

Technical assistance is also provided for the implementation of the interventions financed under the Cohesion Fund (CF). It will support the same activities as for the ERDF.

5. Managing Authority Operational Programme "Sustainable Development and Competitiveness"

Planning Bureau

Mr. Andreas Moleskis

Permanent Secretary

29 Byron Avenue

1409 Nicosia

Tel: +357 22602803

Fax: +357 22666810

E-Mail:

Web

http://www.planning.gov.cy/

6. Title: Operational Programme "Sustainable Development and Competitiveness", under the Convergence and the Regional competitiveness and employment objectives

Intervention type: Operational Programme

CCI No.: 2007CY16UPO001

No. of decision: C/2007/4351

Final approval date: 17/09/2007

7. Breakdown of Finances by priority area

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