EC approves restructuring aid of up to EUR 2.7 bln for Romanian power company CE Oltenia

The European Commission has approved, under EU State aid rules, Romania's plans to grant power company Complexul Energetic Oltenia SA ('CE Oltenia') restructuring aid for up to EUR 2.66 bln (RON 13.15 bln).

The company is the third-largest producer of electricity in Romania and is important for reasons of safety and adequacy of the National Energy System ('NES').

The aid includes EUR 251 mln already extended by Romania to CE Oltenia in 2020 and endorsed under EU State aid rules by the Commission on February 24, 2020. Another EUR 135 mln state aid was disbursed by the Government in April 2021, with the EC's approval as well.

The restructuring plan drafted in 2020 by Romanian coal and power group CE Oltenia was envisaging EUR 1.33 bln grants from the national budget (including the EUR 251 mln and EUR 135 mln tranches already disbursed) and EUR 771 mln grants from European Union funds under the Modernisation Fund - mechanism 10d of the European EU-ETS directive.

The EC initially doubted the recovery plan at Romanian coal and power complex CE Oltenia could be compatible with state aid guidelines. During the in-depth investigation, Romania submitted a revised restructuring plan for the company, for the period 2021-2026, with significant modifications and improvements. The measure will enable the company to finance its restructuring plan and restore its long-term viability, the Commission concluded after in-depth investigations.

The Commission found the aid proportionate, with a contribution from the company and market investors to the expected costs of restructuring amounting to over 30% of the restructuring costs (EUR 1.24 bln), half of which consists in fresh funding by private investors and financial institutions at market conditions.

Compensatory measures are provided to limit potential distortions of competition triggered by the aid. This includes the creation by CE Oltenia, alongside other electricity producers, of dedicated special purpose vehicles for co-investment and operation of natural gas and photovoltaic power plants, as well as bans on the acquisition of interests in competing operators and on the advertisement of state support as a competitive advantage.

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