Background to the complaint

1. The complainant is a business company that took part, as project coordinator, in an EU-funded pilot project aiming to develop the renewable transport infrastructure in several EU Member States of Central and Eastern Europe. The project was governed by a grant agreement concluded with the Innovation and Networks Executive Agency (INEA) which was succeeded by the European Climate, Infrastructure and Environment Executive Agency (CINEA).[1] The project ran from 2017 until 30 June 2023.

2. The project had encountered difficulties and had not been fully implemented.

3. On 24 May 2023, CINEA reminded the complainant that the project would end on 30 June 2023, and that it should submit the final payment claim as soon as possible and at the latest by 30 June 2024.

4. On 30 August 2023, CINEA informed the complainant that it was dissatisfied with the insufficient implementation of the project. CINEA confirmed that no further extension for implementing the project would be granted since it did not appear that this would allow the complainant to complete the project.

5. On 25 February 2024, CINEA reminded the complainant of its duty to submit the final report by 30 June 2024. It said that receiving it well in advance would be helpful to process the final payment in a timely manner. It further said that, otherwise, it reserved the right to apply the relevant provisions of the grant agreement.

6. On 26 and 28 February 2024, CINEA offered to meet the complainant to help it deal with the end-of-project procedures and to draft the final project report and the final payment claim. The meeting took place on 5 March 2024. On 9 April 2024, CINEA provided further guidance to the complainant, and another meeting took place in June 2024.

7. On 20 June 2024, CINEA accepted to extend the deadline for submitting the final report until mid-July 2024.

8. On 29 July 2024, CINEA accepted to extend the deadline for submitting the final report until 16 August 2024.

9. On 9 August 2024, the complainant submitted the final report and related documents.

10. On 23 August 2024, CINEA informed the complainant that the final payment request could not be accepted. CINEA listed several documents that were missing[2] and requested corrections and additional information.

11. On 12 and 26 September 2024, CINEA sent reminders.

12. On 23 August 2024, the complainant sent comments and questions to CINEA. The complainant mentioned financial difficulties due to which it could not pay the auditor who should provide the certificate on financial statements. Moreover, it said that it was in contact with Member State authorities to obtain their certificates.

13. On 3 October 2024, CINEA answered the complainant´s questions.

14. On 10 October 2024, CINEA invited the complainant to submit the complete final report by 18 October 2024. Otherwise, it would be obliged to terminate the grant agreement, declare all costs ineligible and launch a recovery procedure regarding the pre-financing payments made.

15. On 10 October 2024, the complainant informed CINEA that it found a solution and that the auditor would provide the certificate on financial statements by 30 October 2024.

16. On 14 October 2024, CINEA offered to consider extending the deadline for the resubmission of the final project report certified by Member States until 30 October 2024 on condition that the complainant provides a copy of the audit contract and the auditor´s declaration confirming the due date. Otherwise, CINEA would proceed with the termination of the grant agreement. On the same day, the complainant sent the terms of reference signed by the auditor confirming the deadline of 30 October 2024.

17. On 31 October 2024, the complainant informed CINEA that the auditor had requested a few days´ extension. Once the auditor finalised the audit, the complainant would share the audit report with the relevant Member State authorities to obtain their certificates.

18. On 18 November 2024, CINEA decided to terminate the grant agreement and to recover the full amount of its financial contribution (over EUR 12,7 million). The reason was that the complainant had still not submitted the final report. CINEA referred to its earlier ‘notifications’ that it may terminate the grant agreement sent on 10 and 14 October 2024. CINEA said that it had extended the deadline for submitting the final report until 30 October 2024, that is, by four months. The complainant had still not submitted the final report and needed a further extension, which CINEA could not grant.[3]

19. On 21 November 2024, CINEA replied to the complainant´s requests for reconsideration that, it could decide to suspend the termination procedure during the analysis of the document received if it received the complete final payment request within the following few days.

20. On 22 November 2024, the complainant resubmitted the final report. The complainant included the audit terms of reference and the independent report of factual findings (certificate on financial statements). It also included one Member State certificate it had obtained in the meantime in the Member State of its establishment, and a document confirming that another Member State was still processing the request.

21. On 18 December 2024, CINEA informed the complainant that the final report as resubmitted was inadmissible and incomplete and specified the reasons for this. CINEA said that it could not reimburse any costs because all costs presented in the three interim payment claims related to the performance of works, services and supplies were ineligible in the absence of deliverables and/or evidence that the corresponding activities had been carried out and completed. CINEA said that the complainant´s final report clearly stated that none of the activities had been completed. CINEA attached the recovery order.

22. On 4 January 2025, the complainant asked CINEA to cancel its decision to terminate the grant agreement. It also informed CINEA that one of the Member State authorities did not want to issue the relevant certificates because it was not the Member State of establishment. The complainant asked CINEA to provide the reference to the relevant EU legal act that could inform the Member State authority of its duties in this regard. The complainant added that the Member State authorities refused to issue a certificate for its project partner because no costs had been claimed for that entity.

23. On 23 January 2025, CINEA replied to the complainant that it maintained its decision to terminate the grant agreement and to recover the full amount of the pre-financing. It said that the additional documents and explanations provided in the meantime by the complainant did not allow it to consider the final payment claim admissible.

24. On 25 March 2025, the complainant informed CINEA that, on 19 March 2025, it had become the object of insolvency proceedings and provided the relevant court decision.

25. On the same day, the complainant submitted to CINEA the Member State certificates[4] which state that the information provided in the final report and financial statement is “full, reliable and true” and that the costs declared in the financial statement are “real and eligible in accordance with the grant”. The complainant said that it could not submit these certificates earlier because the relevant Member State authorities needed until March 2025 to deliver three of the four certificates. The complainant attached the remainder of the final report package.

26. On 10 April 2025, the European Commission lodged CINEA´s financial claim with the appointed liquidator.

27. On 22 May 2025, CINEA informed the complainant that it could not assess the final report and related documents the complainant had submitted on 25 March 2025.

28. Considering that CINEA´s decision to terminate the grant agreement was unfair, the complainant turned to the Ombudsman.

The inquiry

29. The Ombudsman opened an inquiry into the fairness of CINEA’s decision to terminate the grant agreement and to recover its entire financial contribution.

30. In the course of the inquiry, the Ombudsman inquiry team met CINEA´s representatives and discussed the complaint. The Ombudsman inquiry team also inspected documents provided by CINEA and examined the complainant´s comments.

Arguments presented to the Ombudsman

By CINEA

The reasons for the termination and the recovery

31. CINEA said that it had selected the project following a highly competitive call for proposals. It was a mid-sized project valued at approximately 27 million EUR. Moreover, it was a pilot project with multiple components: the production of Liquified Biogas (LBG) and Liquified Natural Gas (LNG) fuel, the construction of an infrastructure network of fuelling stations, and mobile assets like trucks and buses. The project was a ‘pilot project’, which meant that the complainant had to submit reports to prepare for a broader rollout. The reports and evidence of the steps achieved were crucial to draw lessons and to further develop this area of renewable energy.

32. The project was scheduled to begin in 2017 and become fully operational by December 2020. CINEA monitored the project closely. It was aware of the difficulties encountered by the complainant. CINEA demonstrated significant flexibility by agreeing to extend the duration of the project. CINEA and the complainant signed the first amendment in September 2018. With the last amendment, the duration of the project was extended until 30 June 2023. However, by the end of the project, the complainant had not made any significant progress.

33. CINEA provided a pre-financing of approximately EUR 12.7 million at the start of the project to provide the complainant with the resources needed to start the project. The complainant submitted periodic progress reports and cost claims. CINEA checked their admissibility such as whether the claim included an independent audit certificate, the eligibility of the cost items and the quality. The technical implementation was to be assessed at the end of the project to determine the final amount of the grant.

34. At the end of the project, the complainant was expected to submit a final report and a request for the payment of the balance. The complainant submitted the final report with a significant delay. It was deemed inadmissible because it did not satisfy all requirements. In addition, the final report showed discrepancies between the amount indicated in the audit certificate and the amount declared by the beneficiary in the final cost claim. Moreover, the project results had many shortcomings.

35. CINEA further said that the complainant had not achieved the main objectives of the project. The project was not operational, and no lessons could be learnt. The complainant failed to submit the report on the lessons learnt because it had not established any fixed fuelling station. The complainant delivered 15 trucks as mobile assets, but they were not used for their intended purpose, namely ensuring the effective use of the infrastructure that should have been established.

36. Given that the project focused on delivering results, it included the construction of several fuelling stations to supply liquefied gas to a certain number of trucks. It aimed to test the reality of the market. CINEA stressed that this was an ‘obligation of results’. Ultimately, there were no stations and only a limited number of trucks. Thus, the general technical objectives were not achieved.

37. Furthermore, CINEA said that the complainant had become insolvent in December 2023 but had not informed CINEA until May 2025. Declaring bankruptcy, CINEA said, was a legal obligation under the grant agreement.

38. CINEA took into consideration the exceptional circumstances under which the project had been implemented, namely the COVID-19 pandemic, the war in Ukraine and the energy crisis. It agreed to extend the project for 30 months. However, the infrastructure was expected to be implemented by mid-2018 or mid-2019, well before these disruptions. CINEA granted an 18-month extension, but this did not suffice. According to the revised schedule, the project should have started in 2021 - prior to the war. While COVID-19 had some impact, it could not justify, alongside the war, the failure to implement the project given the extensions.

39. Regarding the Member State certificates, this was only one among many issues. CINEA said that Member States oversee activities within their territory. The certificates allow them to understand the costs and expectations of EU-funded projects. There is no specific guidance on how Member States certificates should be obtained. While delays can occur, they are typically limited to a few weeks or a month. In this case, the delay was longer. CINEA admitted that it was not aware of the exact circumstances, but the correspondence showed that the beneficiary was regularly adding cost items that needed to be processed. Moreover, there were other issues such as the lack of a certificate on financial statements from an auditor. If the Member States’ delay had been the sole issue, it might not have been a significant one; however multiple elements were missing.

40. Regarding the certificate on financial statements, CINEA said that this was a standard requirement. Exceptionally, it is not required for grants below a certain threshold, which was not relevant in this case. CINEA said that such certificates assist it in its analysis.

41. CINEA further argued that the complainant had received interim payments and had thus been aware of all the necessary actions and requirements. Despite this, the final payment claim did not meet these requirements. CINEA informed the complainant of the reasons why it considered the final report inadmissible. By March 2025, the latest final payment claim remained inadmissible due to inconsistencies between the auditor´s certificate on financial statements and the costs claimed. When payment claims are not deemed admissible, CINEA does not assess the eligibility of the costs. In this case, CINEA performed a quick check and noted that many expenses were clearly ineligible because of their nature. This was the case for cost claims relating to the grant agreement preparation amounting to several million euros.

The procedure followed by CINEA

42. CINEA stated that termination of a grant agreement is rare. It is a measure of last resort. The procedure set out in the grant agreement is intended for terminating the grant agreement during its implementation when the beneficiary faces major issues. The decision to send a termination letter at this stage was necessary to establish a point in time to stop requesting documents after several exchanges had proved futile.

43. CINEA said that the reason for the termination was the complainant´s failure to submit an eligible final payment claim. CINEA sent multiple rejection letters to the beneficiary, which explicitly outlined the specific reasons for rejection and detailed the corrective measures required to rectify the situation. These communications were part of CINEA’s ongoing efforts to assist the complainant in meeting the requirements. They included precise instructions and feedback.

44. CINEA maintained constant communication with the complainant and had followed a three-step approach.

45. First, CINEA sent written reminders on 24 May 2023 and 25 February 2024, urging the complainant to submit the final project report. Despite further communications, including a meeting on 11 June 2024, the complainant failed to submit the final payment claim by 30 June 2024, the due date.

46. Then, the complainant requested an extension of the deadline for the final report, to which CINEA agreed. Further exchanges took place from 30 June 2024 to 9 August 2024. The complainant submitted the first final payment claim on 9 August 2024. CINEA declared this claim inadmissible on 23 August 2024. In September and October 2024, further exchanges occurred but the complainant was still unable to submit a revised and valid final report.

47. Consequently, on 10 October 2024, CINEA sent a letter to the complainant with the intention to terminate the grant agreement due to the ongoing failure to submit the payment claim. CINEA requested the complainant to resubmit the final report by 18 October 2024. At that stage, the complainant was aware of CINEA´s intention to terminate the grant agreement, as CINEA had already informed it about it on 23 August 2024.

48. CINEA said that it had terminated the grant agreement six days before the expiry of the 45-day foreseen in the grant agreement for the complainant to submit observations. This calculation takes for reference the letter sent by CINEA on 23 August 2024. However, CINEA pursued the discussions with the complainant even after the termination letter had been sent. The complainant also submitted observations.

49. CINEA said that it was very important to receive a valid report rather than terminating the agreement. However, the termination was necessary because the complainant failed to submit an admissible report, despite several reminders and extensions. CINEA stressed that the complainant was informed of the reasons for CINEA´s intention to terminate the agreement. Despite the complainant´s failure to comply with the grant agreement and with CINEA´s notifications, CINEA treated the complainant fairly. Nevertheless, it also had to protect the EU's financial interests.

By the complainant

50. The complainant said that the fact that the project was a ´pilot project´ implied that it could not only succeed, but also fail. The assignment was not to complete the project ‘come what may’, although this was the complainant´s intention. The green transport network which the project sought to develop does not exist precisely because establishing it was a risky venture and not sufficiently interesting for market operators. CINEA says that it selected the complainant in a highly competitive call. This confirms that the complainant had met all relevant requirements. That said, CINEA was also well aware that the complainant was a start-up company with nearly no equity. Yet, it entrusted it with this challenging and risky pilot project instead of choosing a well-established big company. It further let it pursue the project although the complainant kept informing it transparently of the difficulties.

51. The project was very complex, and the complainant worked hard to achieve all its objectives. However, several circumstances complicated its efforts. In its periodic reports the complainant had kept CINEA informed of the difficulties it encountered. Although CINEA´s approach was constructive and understanding, it failed to get sufficiently involved and to react adequately. It never visited the complainant on the ground. It did not advise the complainant to stop the project in good time. Instead, it let the complainant keep spending money on the project although the complainant told CINEA that the project would not be economically viable anymore because of the evolving economic context. For example, by the end of the project, the price of biofuel had become considerably higher than that of diesel. Market operators were thus no longer interested in biofuel. Biofuel buses were not available for purchase on the market anymore. The complainant acknowledged that CINEA advised it to consider limiting the scope of the project. However, this happened only at a very late stage of the project.

52. The complainant submitted periodic reports to CINEA with audit reports and Member State certificates. CINEA accepted these reports and recognized the declared expenditure as eligible. Yet, ultimately, after so many years of implementation, CINEA terminated the grant agreement and claimed all its financial contribution back instead of stopping the project earlier.

53. The project had several aims. Regarding the network as such, it was meant to have several components. First, there had to be a facility that would produce biofuel. Due to technological developments, it was decided, in agreement with CINEA, to create four such facilities in two Member States instead of one central facility. These facilities were to be attached to existing gasworks to produce liquefied biogas. Second, special fuelling facilities were to be built at existing gas stations in two Member States - four in one Member State and two in another. Third, trucks were to be purchased and deployed to transport the fuel to the fuelling stations.

54. Implementing the project required a step-by-step approach. The complainant had to obtain altogether ten building permits in two Member States. The biofuel in question is highly inflammable. During this process, it became apparent that the legal framework in those two Member States was incomplete regarding the safety and the storage of biofuel. The lack of clear regulations led to disproportionately strict requirements from fire safety authorities. The complainant could not know this before starting the procedures. The complainant encountered further difficulties with an owner of a neighbouring land plot as well as with the staff of public authorities who were not familiar with biofuel and this kind of project. In one Member State, the fire department refused to deliver the relevant authorisation. All this took a lot of time and effort. The complainant said that it had taken it approximately two years to obtain a construction permit.

55. The complainant progressed in all areas. It managed to obtain the construction permits and began construction works in one place. It negotiated and obtained agreements with gasworks as well as with a gas station company to place the fuelling stations at its stations based on a rental agreement for thirty years. The complainant started construction works and obtained all necessary material. The complainant still has all technological equipment, including the fuelling stations, in its storage. It is expected to be sold in the context of the insolvency procedure and the proceeds should be paid to CINEA as a privileged creditor. The complainant sent photographs to CINEA, as well as all relevant documentary evidence regarding the administrative procedures and the costs incurred.

56. The whole situation got further complicated by the COVID-19 crisis which struck in 2020 and froze everything. The war in Ukraine that started in early 2022 further adversely impacted the project. In particular, prices of material and fuel increased dramatically. There were shortages of material and manpower as Ukrainian workers had to return home to fight for their country. There were delays everywhere. Construction companies and providers were unable to work.

57. The project was a pilot initiative aimed at demonstrating the technical feasibility, economic viability and market potential of biofuel. The aim of the pilot project was also to draw lessons for the future development of the renewable energy network. The complainant reported the lessons learnt continuously in the periodic reports. This included information on implementation progress, obstacles, communications of public authorities, market insights and financial summaries. The complainant further kept CINEA informed of different obstacles it encountered regarding the legislative and regulatory framework. The difficulties experienced in implementing the project and the ultimate failure to complete it with the complainant ending in bankruptcy also provide relevant lessons. Even if the project had been implemented before 2020, the COVID-19 pandemic, energy and gas crises and the war in Ukraine would have rendered it economically unsustainable. This is illustrated by the current limited use of bioLNG as a fuel in heavy-duty transport. At present, the price of bioLNG would be economically unacceptable for the market, and alternative fuel stations would remain underused. Electromobility and hydrogen propulsion have become the preferred directions of clean transport.

58. The complainant admitted that it had not managed to submit the final project report within the one-year time limit. However, CINEA accepted to extend that deadline until 16 August 2024 and the complainant submitted it within the extended deadline on 9 August 2024. CINEA did not find the submission satisfactory. The complainant sought to address CINEA´s concerns.

59. However, the complainant was unable to address all concerns immediately. It also had difficulties to obtain the auditor´s report because of its financial situation about which it had warned CINEA. The auditor then incurred delays which were entirely beyond the complainant´s control.

60. Moreover, CINEA sought to obtain Member State certificates. However, the Member States needed the auditor´s report to be able to deliver these. The complainant submitted the certificate issued by the Member State in which it was established on 22 November 2024, as soon as it had become available. The other Member States did not want to deliver the certificate saying that the certificate should be issued by the Member State in which the complainant was established. Moreover, both Member States refused to issue certificates for the complainant´s project partner because it had claimed zero costs.

61. The complainant clarified that its partner did not participate in the project actively, being a local transport company, and declared zero costs every year. Yet, CINEA insisted that certificates should be provided for its partner too. The complainant provided all Member State certificates every year, from 2017 until 2023. However, at the end of the project, in the context of the final report, Member States’ authorities started to approach the matter differently. Ultimately, the complainant managed to obtain the remaining certificates too and submitted them to CINEA as soon as they became available. The delay of the Member States’ authorities was beyond the complainant´s control.

62. The complainant said that it had acted in good faith, transparently and complied with the grant agreement. It was surprised that CINEA had decided to report the case to the European Public Prosecutor´s Office which started an investigation which is still ongoing. The court decision declaring the complainant insolvent did not become final until 19 March 2025. The complainant immediately informed CINEA of this and provided all relevant information and documents.

The Ombudsman's assessment

Preliminary observations

63. According to the information provided to the Ombudsman, the European Public Prosecutor´s Office (EPPO) initiated an investigation in relation to this project. The Ombudsman considers that, for the following reasons, this information has no impact on her power to open and conduct an inquiry. It is however information that is relevant for her assessment.

64. First, the EPPO´s role is to investigate, prosecute and bring to judgment the perpetrators of, and accomplices to, criminal offences affecting the financial interests of the Union.[5] On the other hand, the Ombudsman´s Treaty-based mandate is to uncover maladministration in the administrative work of EU institutions and bodies.[6] The Ombudsman’s Statute prevents the Ombudsman from inquiring because of “legal proceedings in progress or concluded concerning the facts which have been put forward”.[7] The Ombudsman has not been informed that any action has been lodged before criminal courts on this matter. In accordance with Article 5(4) of Council Regulation 2017/1939 (the EPPO Regulation), “[t]he EPPO shall conduct its investigations in an impartial manner and shall seek all relevant evidence whether inculpatory or exculpatory”. Thus, the fact that the EPPO launched an investigation does not mean it will necessarily lead to court proceedings.

65. Second, in accordance with the EU Charter of Fundamental Rights, the Ombudsman must respect the presumption of innocence[8] and the right of any citizen and any legal person having its registered office in a Member State to complain to her.[9] In this case, the Ombudsman has only been informed of an ongoing EPPO investigation, but not of a final court ruling establishing any irregularities in the complainant´s conduct. Should there be a final criminal conviction in the future, it will be for the relevant courts to order the appropriate measures to protect the EU’s financial interests.

66. Third, the complainant challenges the fairness of CINEA´s decision to terminate the grant agreement and to recover the entire pre-financing amount. As a matter of principle, the validity of administrative decisions is reviewed as of the time of their adoption. Thus, the Ombudsman must base her assessment on the reasons CINEA provided to the complainant at the time when it decided to terminate the grant agreement and to recover the funds, and the related correspondence. These documents do not refer to any possible criminal conduct.

67. Thus, the question before the Ombudsman is whether CINEA respected the principles of good administration when it decided to terminate the grant agreement and to request a full recovery of its financial contribution.

The merits of CINEA’s decision

68. Having carefully examined the information and evidence provided by CINEA and the complainant, the Ombudsman understands that this was an important pilot project which aimed to develop the use of renewable energy in transport in Europe. As an innovative environmental pilot project focusing on biofuel and its distribution, it entailed significant risks and challenges. This is confirmed by the grant agreement which says that “[p]ublic interventions for stimulating implementation of such infrastructure are ... necessary”[10].

69. The material provided to the Ombudsman, as well as the arguments of the parties, refer to difficulties in obtaining administrative authorisations and construction permits for this kind of project with which Member States’ authorities appear to have had limited experience. It also appears that the difficulties of the project significantly increased with the unexpected COVID-19 pandemic in 2020 and the war in Ukraine in 2022. The complainant argued that these difficulties led, among other issues, to delays, a significant increase in prices of material and fuel, as well as a shortage of material and manpower. For all these reasons, according to the complainant, the project, which included the construction of several fuelling stations, could not advance and be implemented as expected.

70. Given the description of the project and the context within which it was implemented, the Ombudsman finds it plausible that the implementation may have been impacted by both the COVID-19 pandemic and the war in Ukraine. The complainant’s view is that it can take years to complete all necessary procedures and obtain all administrative authorisations, including construction permits especially for a project like this which has significant environmental and safety implications. The complainant also pointed to the need to resolve issues with an owner of a neighbouring land plot, the lack of experience of local authorities with biofuel projects, as well as objections of the fire department. All this raises the question whether the timeframe for the project as agreed by the parties was adequate. 

71. The Ombudsman notes that CINEA agreed to extend the duration of the project in light of the above considerations. She further appreciates that CINEA agreed to give the complainant additional time for submitting the final report and the final payment claim and that it assisted the complainant in preparing these documents. The Ombudsman notes that the complainant was given altogether 16 months, including a 4-month extension, to submit the final project report and the final payment claim. In principle, such a long period of time should have been sufficient.

72. Nevertheless, the Ombudsman is concerned that in spite of this, under the specific circumstances of this case, CINEA´s decisions to terminate the grant agreement and to recover the full amount of its financial contribution may not have been fully in line with the principles of good administration, for the reasons explained below.

The procedure followed by CINEA

1. CINEA´s decision to terminate the grant agreement

- The legal basis

73. The grant agreement lists the grounds on which CINEA may terminate the grant agreement in Article II.16.3.1 letters (a) - (m). However, CINEA´s letter of termination of 18 November 2024 (the ‘termination decision’) merely refers to “Article II.16.3.1” without specifying the relevant letter.

74. During the meeting, CINEA said that the termination had been made because of the complainant´s failure to submit the final payment claim. However, the termination decision says that the termination is made “[a]s a result of the missing final report”. This ground could possibly fall under Article II.16.3.1(i) which refers to situations where CINEA has evidence that a beneficiary committed substantial errors or irregularities including in the event of a “failure to submit required information in order to obtain the grant”. It might also fall under Article II.16.3.1(c) which refers to the beneficiary´s failure “to comply with another substantial obligation incumbent on it under the terms” of the grant agreement.

75. This distinction is important. First, it has consequences for determining CINEA´s financial contribution. Article II.16.4.1, third subparagraph, contains significant limitations for situations where CINEA terminates the grant agreement based on Article II.16.3.1 (c) because of “the coordinator´s failure to produce the request for payment”, which is to be submitted with the final report[11]. The same does not apply to terminations that are based on Article II.16.3.1(i).[12] Second, this distinction is crucial for determining the day on which the termination takes effect. In accordance with Article II.16.3.2, fourth subparagraph, the termination shall take effect on the day following the date on which the coordinator received the formal notification when the termination is based on Article II.16.3.1(i). If the termination is based on Article II.16.3.1(c), it is for CINEA to determine the day on which the termination takes effect in the formal notification.

76. That said, the termination decision appears to have a sufficient legal basis in the grant agreement. As the termination decision referred to the ‘final report’ and not the ‘request for payment’, it appears to be based on Article II.16.3.1(i). Nevertheless, it is regrettable that CINEA did not provide more clarity to the complainant who needed to know the specific legal basis to be able to possibly challenge the validity of the termination decision, to determine its rights and the date of effect of the termination. Moreover, given the significant financial implications of this distinction, CINEA should have provided a more precise indication of the legal basis in the termination decision.

- The termination procedure

77. Article II.16.3.2 of the grant agreement sets out the procedure CINEA must follow when terminating the grant agreement. It says that, before terminating the grant agreement, CINEA must “formally notify the coordinator of its intention to terminate, specifying the reasons thereof and inviting the coordinator, within 45 calendar days from receipt of the notification, to submit observations.” Moreover, if “despite the observations submitted ... [CINEA] decides to pursue the termination procedure, it may terminate the [grant agreement] ... by formally notifying the coordinator thereof, specifying the reasons for the termination.”

78. Having examined the evidence provided by the parties and having received CINEA’s explanations on this matter during the meeting with her inquiry team on 9 July 2025, the Ombudsman finds that CINEA did not follow the above-described procedure.

79. There is nothing in the file to show that CINEA sent to the complainant a letter formally notifying it of its intention to terminate the grant agreement, specifying the reasons and inviting it to submit observations within 45 days.

80. The Ombudsman acknowledges that CINEA sent a letter to the complainant by email on 10 October 2024, to which CINEA referred in its termination decision as the ‘first notification of possible termination of GA’. However, this letter merely invited the complainant to resubmit the final report by 18 October 2024, otherwise, CINEA would be obliged to terminate the grant agreement. This piece of correspondence cannot be regarded as a formal notification of the intention to terminate within the meaning of Article II.16.3.2 of the grant agreement. Rather, it contained a simple warning that CINEA may proceed to termination should the complainant not comply with CINEA´s request. Importantly, the letter did not invite the complainant to submit observations within 45 days but to resubmit the final report.

81. The Ombudsman further acknowledges that CINEA sent a further email to the complainant on 14 October 2024, to which the termination decision refers as the ‘second notification of possible termination of GA’. However, this email cannot be regarded either as a formal notification of the intention to terminate within the meaning of Article II.16.3.2 of the grant agreement. In fact, this was a simple email reply to the complainant including the final sentence that “[o]therwise, CINEA will proceed with the termination of the Grant Agreement as announced previously.” Such an email cannot be regarded as a ‘formal notification’ of the intention to terminate. Moreover, this email also did not invite the complainant to submit observations within 45 days, but to provide a copy of the audit contract and the declaration of the auditor confirming the due date for the certificate on financial statements.

82. During the meeting, CINEA said that it had terminated the grant agreement six days before the expiry of the 45 days’ time limit for submitting observations, which had run from the date of its email of 23 August 2024. Thus, CINEA admitted that it had not complied with the procedure set out in the grant agreement. Nor could the email of 23 August 2024 be regarded as a valid notification of the intention to terminate within the meaning of Article II.16.3.2 of the grant agreement either. In fact, this was a simple email, which did not even refer to the intention to terminate the agreement. It merely informed the complainant that CINEA considered its final payment request inadmissible and invited it to make the necessary rectifications and to resubmit it with all missing documents and information. The email contained no invitation to submit observations within 45 days either.

83. Thus, the Ombudsman finds that CINEA decided to terminate the grant agreement on 18 November 2024 without having followed the procedure set out in the grant agreement.

84. The Ombudsman acknowledges that the correspondence between CINEA and the complainant allowed the complainant to understand CINEA´s concerns about the incomplete final report, as well as that CINEA might terminate the grant agreement. That said, the fact remains that CINEA did not follow the termination procedure set out in Article II.16.3.2 of the grant agreement. This procedure required CINEA to clearly and formally indicate its intention to terminate the grant agreement, provide a clear statement of reasons, and inform the complainant that it may submit observations within 45 days. Based on the information and evidence provided to the Ombudsman, CINEA did not do so.

85. Given the significant impact the termination was likely to have on the complainant, it was necessary to ensure that the complainant was given the opportunity to defend its interests. Moreover, disregarding the rules governing the termination procedure was liable to render the termination invalid[13], which may have affected CINEA’s capacity to protect the EU’s financial interests.

2. CINEA´s decision to recover the entire EU financial contribution

86. Article II.26.1 of the grant agreement provides that: “[w]here the payment of the balance takes the form of a recovery, [CINEA] shall formally notify the coordinator of its intention to recover the amount unduly paid: ... (b) inviting the coordinator to make any observations within a specified period ... If no observations have been submitted or if, despite the observations submitted by the coordinator, CINEA decides to pursue the recovery procedure, CINEA may confirm recovery by formally notifying to the coordinator a debit note ... specifying the terms and the date for payment.”

87. Based on the evidence provided to the Ombudsman, it appears that CINEA never invited the complainant to make observations on its intention to recover its financial contribution. In fact, the termination decision mentions that CINEA “will require the reimbursement of the pre-financing payments”. However, instead of inviting the complainant to make observations, it advised it that it may bring proceedings before the EU General Court or file a complaint with the Ombudsman.

88. On 18 December 2024, CINEA directly sent a debit note to the complainant without giving it the prior opportunity to submit observations. It only advised once again the complainant of the possibility to challenge the decision by bringing proceedings before the EU General Court or by filing a complaint with the Ombudsman.

89. The recovery order concerned more than EUR 12.7 million, the entire amount of the EU contribution, and was made a year and a half after the project had ended. As such, it was likely to have a significant adverse effect on the complainant. Therefore, it was particularly important for CINEA to respect the complainant´s procedural rights.

90. For the sake of completeness, it is worth noting that the grant agreement follows a two-step procedure, or two distinct procedures: (i) the termination and (ii) the possible recovery. If CINEA intends to terminate the grant agreement as in this case, it must make a reasoned advance notification to the coordinator and give it 45 calendar days to submit observations on the intention to terminate. CINEA must then examine these observations. It is only thereafter that CINEA may proceed to termination (Article II.16.3.2). If CINEA also decides to recover funds, it must make a further advance reasoned notification of its intention, give the coordinator a further opportunity to submit observations on its intention to recover funds and specify the deadline. CINEA must then examine these observations too. It is only then that it may proceed to the recovery by sending a debit note (Article II.26.1).

91. In this case, it appears that CINEA did not comply with these procedural steps and safeguards.

3. Intermediate conclusion

92. Maladministration occurs when a public body fails to act in accordance with a rule or principle which is binding upon it.[14] This includes the observance of applicable contractual rules and obligations.

93. Therefore, in principle, the procedural shortcomings identified above would justify a finding of maladministration. However, the information and documents provided to the Ombudsman show that, in spite of these shortcomings, the complainant in this case was able to communicate with CINEA and to make its views known. Thus, it does not appear that the complainant was materially adversely affected in its rights as a result of these shortcomings. For this reason, the Ombudsman does not find it necessary to make a formal finding of maladministration and to pursue the inquiry regarding these aspects of the case.

94. However, the Ombudsman is concerned that CINEA may not have had in place adequate internal mechanisms, tools and templates allowing its staff to know which procedural steps they should follow and what information should be contained in the correspondence to the complainant at each stage. According to CINEA, one of its duties is to protect the EU’s financial interests. This requires respecting all relevant rules and procedures so that recovery claims are valid and can be enforced. The Ombudsman will make a corresponding suggestion for improvement below.

The overall fairness and proportionality of CINEA´s decision to terminate the grant agreement and to recover the full amount of its financial contribution

95. In addition to the above procedural issues, the Ombudsman´s inquiry identified several issues that suggest that CINEA´s decision to terminate the grant agreement and to recover the full amount of its financial contribution may not have been entirely fair and proportionate.

96. First, as already stated in paragraphs 68-70 above, it appears that the project was very complex, entailed inherent risks and that its full implementation required more time than initially planned. Moreover, as unfortunate as it may be, the information and evidence provided to the Ombudsman suggest that the complainant encountered real and unexpected difficulties. Entities implementing EU-funded projects should be diligent and should expect that such difficulties may arise and should plan accordingly. This is even more so for pilot projects in new areas. It is also the role and responsibility of EU institutions and bodies as project partners to assist beneficiaries of EU-funding in the context of such projects.

97. The evidence in this case suggests that the implementation of the project proved challenging and in part unfeasible. It further appears that the complainant spent money while implementing the project. This is evidenced, in particular, by the independent report on factual findings of 19 November 2024, which covers only a sample of costs and which specifically refers to costs such as personnel costs including drivers, the purchase of 15 tractors and related costs (fuel, maintenance, insurance), the rental of office space, parking space and warehouses for storing technology and equipment, engineering costs, costs related to administering construction permits.

98. Moreover, the complainant provided copies of Member State certificates which state that the information provided in the final report and financial statement is “full, reliable and true”, and that the costs declared in the financial statement are “real and eligible in accordance with the grant”.

99. While the Ombudsman understands that both CINEA and the complainant had higher expectations, it appears that some concrete achievements were made, including the acquisition of 15 trucks, the delivery of six fuelling stations, including six containers with a capacity of 60m3, as well as a mobile fuelling station, obtaining construction permits - a challenging and timely process - as well as some construction works. While the project was not completed, its purpose may have been partly served in revealing the obstacles on the road towards a greener Europe relying on biofuel. As the complainant argued, lessons could also be drawn from this pilot project regarding this aspect of renewable energy in transport, its feasibility and what needs to be addressed to achieve these goals.

100. The grant agreement does not appear to contain any provision that failure to complete the project in full would result in a zero financial contribution from the EU. On the contrary, the grant agreement contains several provisions reflecting the principle of proportionality, which is an important principle of good administration.

101. Article II.16.4.1 of the grant agreement says that “[w]here the [grant agreement] is terminated, payments by [CINEA] shall be limited to the amount determined ... on the basis of the eligible costs incurred ... and the actual level of implementation of the action on the date when the termination takes effect.” (emphasis added) Article II.25.4 provides that “If the action is not implemented properly ..., or if any beneficiary fails to comply with any other obligations under the [grant agreement], [CINEA] may reduce the grant amount ... in proportion to the improper implementation of the action or to the seriousness of the breach of obligations.” (emphasis added)

102. In the Ombudsman´s view, CINEA should have proceeded based on these provisions and determine the level of contribution it should make. In its letter of 18 December 2024, CINEA wrote that it could not reimburse any costs because “all costs incurred presented in the three interim payment claims, related to the performance of works, services and supplies, [we]re ineligible in the absence of deliverables and/or evidence that the corresponding activities ha[d] been carried out and ... completed. ... the final report ... clearly state[d] that none of the activities ha[d] been completed.” This approach does not appear to be in line with the above provisions of the grant agreement (Articles II.16.4.1 and II.25.4).

103. The Ombudsman further notes that the decision to terminate the grant agreement came very late - 16 months after the project had ended and after six years during which the complainant had been implementing the project.

104. The Ombudsman agrees with CINEA that it is very unusual for EU institutions and bodies to terminate grant agreements at such a late stage. In principle, once the project has ended, EU institutions assess the eligibility of the costs claimed and whether the project has been implemented fully and adequately. Such an approach would appear to be more in line with the principles of fairness and proportionality.

105. The complainant spent six years working on the project. CINEA´s decision to terminate the agreement and to recover the full amount of EU contribution of nearly EUR 13 million came nearly a year and a half later. Although CINEA provided additional explanations regarding the eligibility of the costs on 18 December 2024, its decision to terminate the agreement and to recover the full amount appeared to be based on a formal, administrative issue related to the submission of the final report and related documents. This does not appear fair

106. Specifically, the complainant provided CINEA with yearly reports flagging the difficulties encountered in the implementation of the project. The information and evidence provided to the Ombudsman does not allow her to assess whether the complainant or CINEA could have done anything better to save the project. What is however apparent is that, although CINEA was regularly informed of the project difficulties, it did not provide specific assistance to the complainant or made suggestions to try and safeguard the EU investment.

107. Thus, it does not appear fair that only the complainant should bear all the costs and that the EU should make a zero contribution towards the costs of a project that sought to further its goals in the area of green energy.

108. Moreover, CINEA criticised the complainant for not having submitted the auditor´s certificate on financial statements (signed terms of reference and signed independent report of factual findings). It appears that this issue has been settled because CINEA did not mention it in Annex I to its letter of 18 December 2024.

109. Annex I to CINEA´s letter of 18 December 2024 further said: “Final technical report is missing (however, it was submitted in the first submission)”. As CINEA acknowledged that the complainant had already submitted this document, it appears that this issue too could be regarded as settled.

110. CINEA further criticised the complainant for not having submitted four Member State certificates. The complainant provided the certificate issued by the Member State in which it was established on 22 November 2024. Thus, only three remaining certificates were missing: the complainant´s certificate from another Member State in which the project was implemented and two certificates for its project partner (one from the Member State of its establishment and another from the other Member State of implementation).

111. However, Article II.23.2.2(c) of the grant agreement says that the request for payment of the balance shall be accompanied by: “for beneficiaries established in the European Union, the certification by the Member State in which the beneficiary is established that i) the information provided is full, reliable and true and ii) the costs declared in the final financial statement are real and eligible in accordance with this [grant agreement]; in exceptional cases, at the request of the beneficiary, the certification may be provided by the Member State in which the action is implemented” (emphasis added). CINEA did not show why this was an ‘exceptional case’ requiring certification from the Member State of implementation.

112. The material provided to the Ombudsman further shows that no costs were claimed on behalf of the project partner. For this reason, Member State authorities refused to issue certificates for that partner. This allegation is corroborated by some of the correspondence the complainant provided to the Ombudsman. This appears logical because it is not clear why or how a zero-cost claim, or the absence of a reimbursement claim, should be certified. It does not appear surprising that Member States’ authorities were not at ease with such a request. Apparently, they ultimately accepted to do so, which allowed the complainant to submit these certificates in March 2025, with a delay.

113. Against this background, it appears that the complainant settled this issue by providing the certificate issued by its Member State of origin on 22 November 2024 and that CINEA should not have required the additional certificates. At the very least, given the objective justifications, CINEA could have accepted the late submission.

114. Moreover, the complainant said that it had provided to CINEA Member State certificates every year. Thus, it appears that only the final Member State certificates were missing. CINEA could have taken this into account.

115. Annex I to CINEA´s letter of 18 December 2024 further identified several pieces of information that were missing from Excel tables and two pieces of information that were incorrect or inconsistent. Without having received more information on these points, it would appear that they could have been easily completed and/or rectified. While the Ombudsman appreciates that CINEA extended the deadline for submission several times, it could still have given the complainant one more opportunity to correct and complete this remaining information.

116. In addition, the Ombudsman notes that, although CINEA agreed to extend the deadline for submitting the final report and payment request until 30 October 2024, taking into consideration the due date for the auditor´s certificate on financial statements, it did not take into consideration that the Member State certificates could not be provided at the same time because the Member State authorities concerned apparently needed the auditor’s certificate on financial statements to provide certification. Thus, more time was needed for Member States’ authorities to assess the material and complete the relevant procedures. It appears that the time needed by the Member States’ authorities, which does not appear unreasonable, was beyond the complainant´s control.

117. In light of the above considerations, the Ombudsman regrets that CINEA refused to examine the latest resubmission made by the complainant on 25 March 2025.

118. To conclude, on the one hand the Ombudsman appreciates CINEA´s willingness to help the complainant by extending the duration of the project and the deadline for submitting the final report. She also appreciates that CINEA assisted the complainant during meetings and by providing advice.

119. On the other hand, however, the Ombudsman considers that the decision to terminate the grant agreement at such a late stage with the consequence that the complainant would receive no EU contribution at all and would have to reimburse a very significant amount of money that may have been legitimately and in good faith spent on the expenses incurred during the six years of the project’s implementation, may have resulted in an outcome that is not entirely fair and proportionate.

120. The Ombudsman further notes that the complainant kept CINEA informed of the difficulties encountered in its periodic reports. However, CINEA provided no evidence showing that it proactively intervened to help the complainant address these issues before it was too late, other than by agreeing to extend the project duration.

121. In principle, the above findings would justify a preliminary finding of maladministration. However, the following specific circumstances must also be taken into account.

122. It is not disputed that CINEA has paid to the complainant nearly EUR 13 million from EU funds for a project which the complainant failed to deliver. The EU is unlikely to be able to recover this amount because of the complainant´s insolvency. Whether CINEA should take partial responsibility for this failed project by accepting to reduce the amount to be recovered cannot be answered at this stage. In fact, the EPPO is currently investigating potential irregularities during the implementation of the project. Its investigation may thus lead to further relevant findings that CINEA would need to take into consideration. In the light of these very particular circumstances, it does not appear feasible or reasonable at his stage to invite CINEA to review the calculation of the EU financial contribution to this project. Therefore, no further inquiries into this case are justified.

Conclusion

Based on the inquiry, the Ombudsman closes this case with the following conclusion:

CINEA did not fully comply with the grant agreement’s procedural requirements, and its decision appears to have resulted in an outcome that was not entirely fair and proportionate. However, given the complainant’s insolvency and the ongoing EPPO investigation into potential irregularities, CINEA cannot reasonably be expected to review its decision at this stage. The Ombudsman therefore concludes that no further inquiries are justified and closes the case.

The complainant and CINEA will be informed of this decision.

Suggestion for improvement

CINEA should review its internal mechanisms, tools and templates to ensure that its staff follow the procedures set out in grant agreements and provide all relevant information in the correspondence sent to grant beneficiaries at each procedural stage. In particular, CINEA should ensure that its staff fully comply with the termination and recovery provisions in grant agreements so that the procedural guarantees of those directly affected by these provisions are always safeguarded. 

 

Teresa Anjinho

European Ombudsman

Strasbourg, 23/07/2026

 

[1] Article 15 of Commission Implementing Decision (EU) 2021/173 of 12 February 2021 establishing the European Climate, Infrastructure and Environment Executive Agency, the European Health and Digital Executive Agency, the European Research Executive Agency, the European Innovation Council and SMEs Executive Agency, the European Research Council Executive Agency, and the European Education and Culture Executive Agency and repealing Implementing Decisions 2013/801/EU, 2013/771/EU, 2013/778/EU, 2013/779/EU, 2013/776/EU and 2013/770/EU: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32021D0173

[2] Signed individual financial statements, signed Member State certification, signed consolidated financial statement, certificate on financial statements - signed terms of reference and signed independent report of factual findings with annexes. 

[3] CINEA based its decision on Articles II.16.3.1 and II.16.4.1 of the grant agreement.

[4] Dated 21 November 2024, 5 March 2025 and 21 March 2025.

[5] Article 4 of Council Regulation (EU) 2017/1939 of 12 October 2017 implementing enhanced cooperation on the establishment of the European Public Prosecutor’s Office (‘the EPPO’): https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02017R1939-20210110

[6] Article 228 of the Treaty on the Functioning of the European Union.

[7] Article 2(9) of the Statute: https://www.ombudsman.europa.eu/en/legal-basis/statute/en.

[8] Article 48(1) of the EU Charter of Fundamental Rights provides that: “Everyone who has been charged shall be presumed innocent until proved guilty according to law.”

[9] In accordance with Article 43 of the EU Charter of Fundamental rights: “Any citizen of the Union and any natural or legal person residing or having its registered office in a Member State has the right to refer to the European Ombudsman cases of maladministration in the activities of the institutions, bodies, offices or agencies of the Union ...”

[10] Annex I, Description of the Action, Article I.3.

[11] Article II.23.2.2 of the grant agreement.

[12] See also Article II.23.3 of the grant agreement.

[13] Only the competent courts could make such a determination.

[14] See the European Ombudsman´s Annual Report for 1997, page 21: https://www.ombudsman.europa.eu/en/publication/en/3447