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The European Commission has approved an around €400 million (BGN 800 million) Bulgarian measure to support the public supplier of natural gas in Bulgaria, Bulgargaz EAD, in the context of Russia’s war against Ukraine. The measure was approved under the State aid Temporary Crisis Framework, adopted by the Commission on 23 March 2022, based on Article 107(3)(b) of the Treaty on the Functioning of the European Union (‘TFEU’), recognising that the EU economy is experiencing a serious disturbance, as amended on 20 July 2022. Such Temporary Crisis Framework was amended again on 28 October 2022, and replaced by the Temporary Crisis and Transition Framework, adopted by the Commission on 9 March 2023, to support measures in sectors which are key to accelerate the green transition and reduce fuel dependencies. The Bulgarian measure Bulgaria notified to the Commission, under the Temporary Crisis Framework, an around €400 million (BGN 800 million) measure to support Bulgargaz EAD in the context of Russia’s war against Ukraine. Bulgargaz EAD is the exclusive public supplier of natural gas in Bulgaria, indirectly wholly owned by the Bulgarian State. Due to the suspension by Russia of Bulgargaz EAD’s long-term contract with Gazprom Export OOO, which covered 90% of the quantities of natural gas delivered by Bulgargaz EAD to customers, this beneficiary faced unusual liquidity needs in order to secure its supply of natural gas in a context marked by the surge in gas prices on the European energy markets. Under this measure, the aid takes the form of a loan with subsidised interest rates granted by the Bulgarian Ministry of Energy. The Commission found that the Bulgarian measure is in line with the conditions set out in the Temporary Crisis Framework. In particular, the subsidised loan (i) was granted before 31 December 2022; (ii) covers urgent liquidity needs for working capital purposes; (iii) has a maturity of 3 years; and (iv) has interest rates that respect the minimum levels set out in the Temporary Crisis Framework. The Commission concluded that the Bulgarian measure was necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Crisis Framework. On this basis, the Commission approved the aid measure under EU State aid rules. Background The State aid Temporary Crisis Framework, adopted on 23 March 2022, enabled Member States to use the flexibility foreseen under State aid rules to support the economy in the context of Russia’s war against Ukraine. The Temporary Crisis Framework has been amended on 20 July 2022, to complement the Safe gas for a Safe Winter Package and in line with the REPowerEU Plan objectives. The Temporary Crisis Framework has been further amended on 28 October 2022 in line with the Regulation on an emergency intervention to address high energy prices and the Regulation enhancing solidarity through better coordination of gas purchases, reliable price benchmarks and exchanges of gas across borders. The Temporary Crisis Framework provided for the following types of aid, which could be granted by Member States: The following types of aid were also possible on a case-by-case basis, subject to conditions: (i) support for companies affected by mandatory or voluntary gas curtailment, (ii) support for the filling of gas storages, (iii) transitory and time-limited support for fuel switching to more polluting fossil fuels subject to energy efficiency efforts and to avoiding lock-in effects, (iv) support the provision of insurance or reinsurance to companies transporting goods to and from Ukraine, and (v) support for recapitalisation measures where such solvency support is necessary, appropriate and proportionate. Sanctioned Russian-controlled entities were excluded from the scope of these measures. The Temporary Crisis Framework included a number of safeguards: On 9 March 2023, the Commission adopted a new Temporary Crisis and Transition Framework to foster support measures in sectors which are key for the transition to a net-zero economy, in line with the Green Deal Industrial Plan. Together with the amendment to the General Block Exemption Regulation (‘GBER’) that the Commission endorsed on the same day, the Temporary Crisis and Transition Framework will help speeding up investment and financing for clean tech production in Europe. It will also assist Member States in delivering on specific projects under National Recovery and Resilience Plans which fall within their scope. The new Framework amends and prolongs in part the Temporary Crisis Framework, adopted on 23 March 2022, to enable Member States to use the flexibility foreseen under State aid rules to support the economy in the context of Russia’s war against Ukraine. The Temporary Crisis and Transition Framework complements the ample possibilities for Member States to design measures in line with existing EU State aid rules. For example, EU State aid rules enable Member States to help companies cope with liquidity shortages and needing urgent rescue aid. Furthermore, Article 107(2)(b) of the Treaty on the Functioning of the European Union enables Member States to compensate companies for the damage directly caused by an exceptional occurrence, such as those caused by the current crisis.
The non-confidential version of the decision will be made available under the case number SA.107425 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 Competition Weekly e-News. More information on the Temporary Crisis Framework, the Temporary Crisis and Transition Framework, and other actions taken by the Commission to address the economic impact of Russia’s war against Ukraine and foster the transition towards a net-zero economy can be found here. With this €400 million measure, Bulgaria ensures that Bulgargaz EAD can meet its liquidity needs. This allows this public supplier of natural gas to continue its activities, thereby ensuring energy supply for Bulgarian consumers and companies.Quote(s)
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