This is one of the questions that the European Commission is currently reviewing after the opening of an in-depth investigation in an ad hoc case against Greece.
Two sets of measures are at stake. The first measures concern suspected preferential economic advantages conceeded to Aluminium of Greece, an aluminium production company, by the national state own utility Public Power Corporation. The investigation is based on two complaints addressed to the Commission and relative to the alleged imcompatible state aids granted to Aluminium of Greece, i.e.: lower electricity prices, tax exemptions, deferral of taxation obligations, loans under privileged terms, land expropriation, exclusive use of seashore and sea area.
In its press release, the European Commission talks about a presumption of state aid. However, as it underlines, most of the aids were granted before Greece's accession to the EU, and constitute "existing aid", no subject to reimbursement. "Those privileges were put into force in the context of the company's establishment in 1960, long before Greece's EU accession in 1981. Most of them were not modified after the accession and constitute therefore existing aid, which need not be repaid."
The application of lower electricity prices seems however to have continued along the years: "as regards electricity prices, the Commission found taht Greece had continued to apply lower electriicty prices for Aluminium of Greece, for 15 months after the expiry of the establishment contract. The difference between the privileged pricing and the normal one would amount to EUR17.4 million."
A second set of measures examined by the European Commission services concerns the construction costs of a high-pressure natural gas pipeline connecting Aluminiun of Greece co-generation power plant with the transmission grid. Those costs are suspected to have been partially paid by the Greek state. The Commission is still awaiting for comments from Greece on that point.
These are the facts subject to investigation. The qualification of lower electricity price is of particular interest, and any decision from the Commission will be reported here.
Not a new question - Price subsidies resulting in low energy prices have already been qualified as illegal state aids by the European Commission. First, and without having access to the facts of the case (not yet published), the nature of the aid seems to fit into the definition of state aid. The question of possible justification remains to be seen. Second, recent decisions taken by the European Commission underlines a constant practice regarding price subsidies. Among the most recent cases are: Alcoa case (2009), which includes a judicial side (Alcoa lost before the Tribunal of First Instance (T-332/06) under appeal); or previously against Italy regarding lower electricity tariffs applied to manufacturing companies (ThyssenKrupp, Cementir and Terni Nuova; C 36/A/2006).
Reference: Case nr. NN 62/2009, Alleged aid to Aluminium of Greece. Press release IP/10/58 of 27 January 2010, State aid: Commission opens in-depth inquiry into preferential electricity tariffs for Aluminium of Greece.
Two sets of measures are at stake. The first measures concern suspected preferential economic advantages conceeded to Aluminium of Greece, an aluminium production company, by the national state own utility Public Power Corporation. The investigation is based on two complaints addressed to the Commission and relative to the alleged imcompatible state aids granted to Aluminium of Greece, i.e.: lower electricity prices, tax exemptions, deferral of taxation obligations, loans under privileged terms, land expropriation, exclusive use of seashore and sea area.
In its press release, the European Commission talks about a presumption of state aid. However, as it underlines, most of the aids were granted before Greece's accession to the EU, and constitute "existing aid", no subject to reimbursement. "Those privileges were put into force in the context of the company's establishment in 1960, long before Greece's EU accession in 1981. Most of them were not modified after the accession and constitute therefore existing aid, which need not be repaid."
The application of lower electricity prices seems however to have continued along the years: "as regards electricity prices, the Commission found taht Greece had continued to apply lower electriicty prices for Aluminium of Greece, for 15 months after the expiry of the establishment contract. The difference between the privileged pricing and the normal one would amount to EUR17.4 million."
A second set of measures examined by the European Commission services concerns the construction costs of a high-pressure natural gas pipeline connecting Aluminiun of Greece co-generation power plant with the transmission grid. Those costs are suspected to have been partially paid by the Greek state. The Commission is still awaiting for comments from Greece on that point.
These are the facts subject to investigation. The qualification of lower electricity price is of particular interest, and any decision from the Commission will be reported here.
Not a new question - Price subsidies resulting in low energy prices have already been qualified as illegal state aids by the European Commission. First, and without having access to the facts of the case (not yet published), the nature of the aid seems to fit into the definition of state aid. The question of possible justification remains to be seen. Second, recent decisions taken by the European Commission underlines a constant practice regarding price subsidies. Among the most recent cases are: Alcoa case (2009), which includes a judicial side (Alcoa lost before the Tribunal of First Instance (T-332/06) under appeal); or previously against Italy regarding lower electricity tariffs applied to manufacturing companies (ThyssenKrupp, Cementir and Terni Nuova; C 36/A/2006).
Reference: Case nr. NN 62/2009, Alleged aid to Aluminium of Greece. Press release IP/10/58 of 27 January 2010, State aid: Commission opens in-depth inquiry into preferential electricity tariffs for Aluminium of Greece.
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