OP EIC suspension to disrupt investments of thousand of firms

The suspension of the Czech Republic's Operational Programme Enterprise and Innovations for Competitiveness (OP EIC) by the European Commission (EC) will disrupt investment plans of thousands of domestic companies, chiefly the small ones, employers' representatives told CTK today.

The EC has suspended the programme, which contains roughly Kc114bn, due to the result of an audit which revealed a 14-percent error rate in it, daily Lidove noviny (LN) wrote today.

"We consider this a big problem, though it has not come as a complete surprise. We are currently communicating with dozens of startled enterprises, providing them with information support. It is one of the biggest failures concerning drawing money from structural funds. If the programme is suspended for several months, it will disrupt companies' investment and innovation plans," Small and Medium-Sized Enterprises Association president Karel Havlicek told CTK.

"Companies are in uncertainty as to whether they will be able to draw the subsidies. Logically, they are facing the strategic decision on what to do with their investments," Confederation of Industry spokeswoman Eva Velickova said. A lot of companies have already submitted their projects they want to have covered from the programme. If the Industry and Trade Ministry does not give them a clear signal showing that it is working on a solution to the situation, they may withdraw from their plans, Velickova said.

The Enterprise and Innovations for Competitiveness programme falls under the Industry and Trade Ministry.

The projects containing errors continue and will be covered from national resources until the EC make a decision on them, Industry and Trade Minister Tomas Huner said at a press conference today. Thus, the suspension will have no impact on the applicants, he added.
The errors in question arose in 2015-2016, when the ministry was headed by Social Democrat ministers, Huner said.

"We have removed the errors gradually and we have adopted necessary measures. An internal audit was carried out even before we received the letter from the EC informing us about the suspension of the programme. I will initiate steps to investigate and punish the persons responsible for these complications," Huner said.

According to the association's surveys, about a half of small and medium-sized enterprises make investments with the support of EU funds. Their investments are usually highly innovative projects, often linked with research.

OP EIC is a key programme of subsidies for Czech entrepreneurs, mainly small and medium-sized companies, during the budget period 2014-2020. According to the latest information, companies have asked for subsidies for a total of 13,000 projects so far. As many as 4,500 applications have already met all requirements and contracts worth Kc45bn in total were made with the applicants.

"We estimate that the programme will be suspended for several months," Industry Ministry spokeswoman Stepanka Filipova told LN.

If the uncertainty continues for a long time, it would have macroeconomic impacts, Chamber of Commerce spokesman Miroslav Diro said.

The Czech Republic can draw up to EUR23.9bn (about Kc600bn) from EU funds in 2014-2020.

The EC will assess individual countries and their programmes in terms of fulfilment of their obligations towards the Europe 2020 strategy at this end of this year. If the Czech Republic fails to fulfil these obligations, it may lose 6 percent of the allotted amount of funds.

In the previous budget period 2007-2013, the Czech Republic could draw about Kc700bn. About 4 percent of this amount failed to be drawn.

Source: CTK