The European Commission has found that energy producer Complexul Energetic Hunedoara (CE Hunedoara) received around 60 million euros of incompatible state aid from Romania through four publicly financed loans, according to the European Commission Representation in Bucharest.
“Romania now needs to recover the illegal aid plus interest,” reads a press statement released by the representation office on Thursday.
Commissioner Margrethe Vestager, in charge of competition policy, said: “A government can support a company in financial difficulty if the company has a sound restructuring plan, contributes to the cost of its restructuring and competition distortions are limited. In the case of CE Hunedoara these conditions were not met – we found that the public loans granted by Romania to CE Hunedoara gave the company an unfair economic advantage. This means that the state aid was illegal. Now Romania needs to recover the illegal aid that was granted to the company.”
On April 21, 2015, the Commission approved under EU state aid rules temporary rescue aid of 37.7 million euros (167 million lei) to Complexul Energetic Hunedoara (CE Hunedoara), a Romanian state-owned electricity and heat producer.
“In the context of this decision, Romania committed to submit a restructuring plan aimed at ensuring the future viability of CE Hunedoara, should the company be unable to pay back the rescue aid in six months’ time. Following the non-repayment of the rescue aid by CE Hunedoara and in the absence of a credible restructuring plan or any real steps towards the liquidation of the company, in March 2018, the Commission opened an in-depth investigation.”
During the investigation, the Commission assessed whether five publicly financed or supported loans granted to CE Hunedoara were in line with EU state aid rules. Together, the loans amounted to approximately 73 million euros (337 million lei) as of June 30, 2016.
“The Commission concluded that four of the five loans, totalling around 60 million euros plus interest, are incompatible with EU state aid rules and need to be recovered by Romania. The fifth loan constitutes existing aid granted before Romania’s accession to the EU and therefore does not need to be recovered.”
The European Commission is fully committed to support Romania in its efforts to reform the energy sector while addressing the socio-economic consequences of the energy transition, according to the press statement. The Initiative for Coal Regions in Transition, launched in December 2017 as part of the “Clean Energy for all Europeans” Package, is designed to facilitate a fair transition in the EU’s coal regions.
CE Hunedoara currently owes 547 million euros to various Romanian state bodies, including the five loans subject to the State aid investigation concluded today. The company, which employs around 6,500 people, has been loss-making since 2013 and entered temporarily into formal insolvency proceedings under Romanian law, which have been suspended since January 2016.