EC investigates EUR 2 bln state-aid for Romania's coal-power complex CE Oltenia

The European Commission (EC) has opened an investigation to assess whether Romania's support measures for Complexul Energetic Oltenia (CE Oltenia), a state-owned lignite-based electricity producer, are in line with EU rules on state aid.

Romania sent to the EC a plan for the restructuring of CE Oltenia in December of last year, after granting a temporary rescue aid to the company, which the EC approved in February 2020.

The restructuring plan foresees around EUR 2 billion (RON 9.93 billion) of support to CE Oltenia, of which EUR 1.33 billion (RON 6.48 billion) of public support by the Romanian state, in the form of grants and loans (including the EUR 251 million rescue loan that CE Oltenia did not reimburse). The remaining amount would be covered by EU funds, more specifically, a grant by the Modernization Fund, that Romania would apply for.

The EC investigation will look at whether the proposed restructuring plan can restore the long-term viability of CE Oltenia in a reasonable time frame without continued state aid; whether CE Oltenia or investors would sufficiently contribute to the restructuring costs, thus ensuring that the restructuring plan does not rely mainly on public funding and that the aid is proportionate; and whether appropriate measures to limit the distortions of competition created by the aid would accompany the restructuring plan.

Under EU state aid rules, aid may be granted for a period of up to six months ('rescue aid'). Beyond this period, the aid must either be reimbursed, or a restructuring plan needs to be sent to the EC for the aid to be approved ('restructuring aid'), the EC explained.

The plan must ensure that the viability of the company can be restored without further state support, that the company contributes to an adequate level to the costs of its restructuring, and that distortions of competition created by the aid are addressed through compensatory measures.

(Photo source: Greenpeace Romania)