CE Oltenia, a Romanian majority state-owned lignite-based electricity producer, has been experiencing financial difficulties. Following a temporary rescue aid granted by Romania to the company after being approved by the EC in February 2020, on 4 December 2020, Romania notified to the Commission a plan for the restructuring of CE Oltenia.
The restructuring plan foresees around EUR2 billion (RON 9.93 billion) of support to CE Oltenia, of which EUR1.33 billion (RON 6.48 billion) of public support by the Romanian State, in the form of grants and loans (including the EUR251 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.
EU State aid rules enable member states to support companies in difficulty, under certain strict conditions. In particular, rescue aid may be granted for a period of up to six months. Beyond this period, the aid must either be reimbursed or member states must notify a restructuring plan to the Commission for the restructuring aid to be approved.
The restructuring 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, including in particular structural measures.
At this stage, the Commission has doubts that the restructuring plan and the aid to support it satisfy the conditions of the guidelines, it said.
The Commission now plans to examine 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.