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14.03.2018 15:37
The EC investigates the Romanian energy producer CE Hunedoara

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The European Commission launched an investigation of the energy producer Complexul Energetic Hunedoara. The aim is to assess if the number of public support measures received by the energy producer are in line with EU rules on State aid to companies in difficulty, cited Reuters.

CE Hunedoara is a Romanian State-owned electricity and heat producer based in Petrosani, Hunedoara County. It operates hard coal mines to fuel its power plants. The company has a market share of approximately 5% of Romanian electricity generation, and employs around 6 600 people. CE Hunedoara was incorporated in 2012 with assets previously held by other insolvent and liquidated State-owned companies. 

In 2013, the company started loss-making. On 21 April 2015, the Commission approved temporary rescue aid of €37.7 million to CE Hunedoara. In the context of this decision, Romania committed to submit a restructuring plan to ensure the future viability of the company, if the company failed to pay back the rescue aid in six months' time. In another decision from 20 April 2015, the Commission concluded that CE Hunedoara had to repay around €6 million of incompatible State aid.

In January 2016, under Romanian law, CE Hunedoara entered into formal insolvency proceedings with more than €500 million debt owed to various State bodies. This includes a number of state loans and the State aid that CE Hunedoara received. In the meantime, the insolvency proceedings have been suspended pending an appeal by trade unions before a Romanian regional court.

EU State aid rules only allow a state intervention for a company in financial difficulty under specific conditions, requiring in particular that the company is subject to a sound restructuring plan to ensure its return to long-term viability, that the company contributes to the cost of its restructuring and that any competition distortions are limited. But CE Hunedoara restructuring plan does not foresee a discernible contribution of the company to the costs of restructuring nor measures to limit possible distortions of competition as a result of the significant State support.

At this stage, the Commission has doubts whether the proposed restructuring plan could restore the long-term viability of the company without continued State aid.

The Commission will now investigate further to find out whether its initial concerns are confirmed. At the same time, the Commission will continue to work closely with Romanian authorities to find a viable solution for CE Hunedoara's assets that will ensure they continue to supply electricity, reduce costs for consumers and limit the burden on Romanian taxpayers.

TAGS: European Commission 

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