State aid: Commission approves Greek public funding for construction and operation of North section of E65 motorway

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The European Commission has approved, under EU State aid rules, Greek public funding of €442 million for the construction of the North section of the Central Greece Motorway (E65). The Commission also approved support estimated at €38 million to cover the operating and maintenance expenses of the section, in case the toll revenues are not sufficient.

This will allow the completion and operation of part of the Trans-European road network, without causing undue distortions of competition.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The construction of the North section of the Central Greece motorway will complete the Greek part of the E65, contributing to the development of the areas concerned. This decision enables Greece to support the construction of this important infrastructure, which is part of the Trans European road network.”

In May 2019, Greece notified the Commission of its plan to grant €442 million of public support to Kentriki Odos S.A. for the construction of the 70.5 km North section of the Central Greece Motorway (E65). Kentriki Odos S.A. is also the concessionaire of the Middle and South section of the E65 motorway.The 180 km long Greek E65 motorway connects the Athens-Thessaloniki motorway (PATHE) with the Egnatia motorway.

Furthermore, Greece notified its plans to support the operation of the North section by covering the operating and maintenance expenses in case the toll revenues of the section are not sufficient. The operating support is estimated at €38 million.

The Commission assessed the measures under Article 107(3)(c) of the Treaty on the Functioning of the European Union (TFEU), which allows State aid to facilitate the development of certain economic activities or of certain economic areas.

The Commission found that:

the aid will contribute to the development of the economic areas which the E65 motorway mainly serves: Central Greece, Thessaly and Western Macedonia. It will create economic activity and support investment and job creation in these areas, by improving the interoperability, accessibility and safety of the road network. The aid will also help to overcome traffic isolation of these areas and to upgrade fast, international road connection to Albania and North Macedonia.

the aid does not adversely affect trading conditions to an extent contrary to the common interest, since its positive effects in terms of contribution to the development of economic areas clearly outweigh its limited negative effects in terms of distortions of competition and impact on trade between Member States. The support measures are necessary and proportionate for the implementation of the project. In particular, Greece demonstrated that (i) the public financing corresponds to a reasonable estimation of construction costs; (ii) with regard to the operating support, Kentriki Odos S.A. will only be granted the difference between the capped operating and maintenance costs and the toll revenues, and the revenues exceeding the operating and maintenance costs will be returned to the State via a claw-back mechanism; and (iii) the cost estimates are reasonable when comparing to other motorways.

The Commission therefore concluded that the public funding granted for the construction and operation of the North section of the E65 motorway is in line with EU State aid rules.

Background

The Commission already adopted 3 decisions related to the E65 Central Greece Motorway. In 2008, the Commission adopted a “no-aid” decision (N 565/2007) concerning the concession for the entire E65 motorway project. Thereafter, due to the economic crisis, there was a significant decrease in traffic and as result, in toll income. Therefore, the concessionaire could not raise the necessary funds on the market and works on the project stopped in 2011. To unblock the situation, in 2013 the Greek State reached an agreement with the concessionaire which involved (i) a deferral of the construction of the North (70.5 km) and South (32.5 km) sections of the highway; (ii) a further financial contribution by the State; and (iii) cross-subsidisation by revenues from another Greek motorway for the middle section (78.5 km). The Commission approved these measures in 2013 (SA.36893). In 2018, the Commission approved public funding for the construction of the South section of the E65 Motorway (SA.50233).

The non-confidential version of the decision will be made available under the case number SA.54273 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.