NextGenerationEU: European Commission endorses Slovakia’s €6.4 billion modified recovery and resilient plan, including a REPowerEU chapter

Yesterday, the European Commission has given a positive assessment of Slovakia’s modified recovery and resilience plan, which includes a REPowerEU chapter. The plan is now worth €6.4 billion in grants (up from €6 billion) and covers 64 reforms and 60 investments.

Slovakia has proposed several changes to its original plan, such as extending the scope of renewable sources of energy that can receive financial support (e.g. biomethane), and clarifying the scope of investments in healthcare, justice and transport. Changes were also made to planned education reforms, though without affecting their expected positive impact. At the same time, Slovakia has removed two smaller investments from the original plan and adjusted close to 70 measures. This will ensure they can be effectively carried out in a changed context, characterised among other things by inflation being higher than originally expected and by a reduction in the RRF grants financing part of the plan (i.e. the measures that are not included in the REPowerEU chapter).

Slovakia’s changes to the original plan are based on the need to factor in:

  • very high inflation experienced since the original plan adoption in 2021, including a significant increase in construction costs;
  • supply chain disruptions caused by Russia’s war of aggression against Ukraine, which made investments more expensive and caused delays (e.g. in public procurement procedures);
  • the downward revision of its maximum RRF grant allocation, from €6.3 billion to €6 billion. This downward revision is a result of the June 2022 update to the RRF grants allocation key and reflects Slovakia’s comparatively better economic outcome in 2020 and 2021 than initially foreseen.

Importantly, Slovakia has added a REPowerEU chapter to its plan, including six new reforms, four new investments and four scaled-up investments which were already included in the original plan. These will help deliver on the REPowerEU Plan‘s objectives to make Europe independent from Russian fossil fuels well before 2030.

Slovakia has requested to transfer to the plan its share of the Brexit Adjustment Reserve (BAR), in line with the REPowerEU Regulation, amounting to €36.3 million. These funds, added to Slovakia’s REPowerEU grant allocation of €366.4 million, make the approved modified plan worth €6.4 billion.

An additional boost to Slovakia’s green transition  

The modified plan has a significantly stronger focus on the green transition, dedicating 46% (up from 42% in the original plan) of the available funds to measures that support climate objectives.

The six reforms and eight investments included in the REPowerEU chapter strongly contribute to the green transition. The reforms and investments will accelerate the deployment of renewables by defining suitable areas for wind energy development in Slovakia, streamlining the permitting framework, including for the use of geothermal energy and heat pumps, and simplifying grid connection procedures for renewables. Significant investments aim at expanding the capacity of the electricity grid and at boosting sustainable transport through zero-emission vehicles. The REPowerEU chapter also includes measures to increase energy efficiency, for instance by investing and supporting the house renovation of families at risk of energy poverty, and measures to accelerate workers’ take-up of green skills.

Reinforcing Slovakia’s digital preparedness and social resilience 

The Slovak plan’s digital ambition remains high. While some measures of the original plan contributing to the digital transition were modified, the addition of REPowerEU measures such as the modernisation of electricity grids, the establishment of an energy data centre and a unified digital platform for energy data of buildings contribute to the digital transition. The plan dedicates 21% (unchanged compared to the original plan) of its total allocation to support the digital transition.

The modified plan’s social dimension remains ambitious, and continues to foster strong social resilience. Of particular importance are the measures facilitating the accessibility, inclusiveness and quality of the education system, as well as those improving the provision of healthcare and long-term care. The combined package of measures continues to address some of the country’s most important socio-economic challenges. Key reforms and investments related to the judiciary, the business environment and the fight against corruption are also included in the plan.

Next steps

The Council will now have, as a rule, four weeks to endorse the Commission’s assessment.

The Council’s endorsement would pave the way for €80.5 million to be disbursed in pre-financing under REPowerEU. Under the RRF, Slovakia has so far received €823 million in pre-financing in October 2021, as well as €1.1 billion following the first and second disbursements.

The Commission will authorise further disbursements based on the satisfactory fulfilment of the milestones and targets outlined in Slovakia’s modified recovery and resilience plan, reflecting progress on the implementation of the investments and reforms.