State aid: Commission approves €251 million Romanian rescue aid to CE Oltenia

The European Commission has approved, under EU State aid rules, Romanian plans to grant a €251 million temporary loan to Romanian state-owned lignite-based electricity producer Complexul Energetic Oltenia (“CE Oltenia”), which is currently experiencing financial difficulties. CE Oltenia has 3.2 gigawatt of capacity and generates close to 25% of electricity in Romania. EU State aid rules, more specifically, the Commission’s Guidelines on rescue and restructuring aid allow Member States to support companies in difficulties, provided, in particular, that the public support measures are  properly remunerated, limited in time and scope and that they contribute to an objective of common interest. In the present case, the Commission considered that the loan is limited to meeting the company’s well identified liquidity needs. Furthermore, Romania committed to ensure that, after six months, the loan will either be fully repaid, or CE Oltenia will undertake a comprehensive restructuring in order to return to viability in the long term or be liquidated. The Commission also found that the aid contributes to an objective of common interest. In this respect, the loan will mitigate the risk of an insolvency process which would lead to the potential loss of 13,000 jobs in a region already characterised by relatively high unemployment levels. On this basis, the Commission concluded that the rescue loan is limited in time and that its positive effects outweigh the distortions of competition brought about by the public intervention, in line with the Guidelines. This State aid decision does not put into question the need for Romania to meet its legal obligations in terms of air quality, nor does it imply that the Commission recommends the use of lignite as a fuel, given its negative impact on air quality and climate. More information will be available on the Commission’s competitionwebsite, in the public case registerunder the case number SA.56250.