EUROPEAN COMMISSION

Brussels,
C(2009)
PUBLIC VERSION
WORKING LANGUAGE
This document is made available for
information purposes only.

Subject:

State aid N 467/2009 Romania

State aid scheme for supporting investments in expanding and modernising
distribution networks for electricity and natural gas

Sir,

1.

PROCEDURE

(1)

By electronic notification of 3 August 2009, Romania notified a scheme supporting

investments into expanding and modernising distribution networks for electricity and
natural gas on the basis of the Guidelines on National Regional Aid for the period 200720131 (hereinafter "RAG").

(2)

By letter dated 3 September 2009 the Commission services requested additional

information which was submitted by letter dated 13 October 2009.

OJ C 54/2006.

Mr. Ctlin Predoiu

Ministrul afacerilor externe
Aleea Alexandru nr. 31, sector 1,
011822 BUCURETI
ROMNIA
Commission europenne, B-1049 Bruxelles/ Europese Commissie, B-1049 Brussel-Belgium
Telephone: 00-32-(0)2.299.11.11

2.

DESCRIPTION
2.1. Objective of the aid scheme

(3)

The Romanian authorities aim at boosting regional development by encouraging initial

investment for extending and modernising the distribution networks for electricity and
natural gas. The Romanian authorities consider that the economic competitiveness and the
sustainable development are based on an efficient use of resources. Thus, modern
distribution networks are a necessary pre-condition for economic development of regions
that shall boost competitiveness of these regions.
2.2. Legal basis

(4)

The legal bases of the measure are:

-

Draft Ordinance of the Minister of Economy regarding State aid scheme for supporting
investments in expanding and modernising distribution networks for electricity and
natural gas;

Operational Programme for Competitiveness 2007-2013, Priority Axe 4;

2.3. Authority granting the aid/ Administration of the scheme

(5)

The granting authority is the Ministry of Economy through the Management Authority of
the OP for Competitiveness.

(6)

The aid under the notified scheme will be granted to projects selected within the limits of
the available budget. The criteria for the selection of projects consist of formal and
substantive requirements which enable the selection of the best projects via a three-stage
competitive procedure.2
2.4. Geographical scope

(7)

The scheme is applicable in the whole territory of Romania, which entirely qualifies as an
assisted region under the derogation laid down in Article 107(3)(a) of the Treaty on the
Functioning of the European Union3, in conformity with the regional aid map for
Romania4.

Applicants Guide is available under

http://oie.minind.ro/oie/html/documentex/Ghid%20distributie%209%20Oct.doc
http://amposcce.minind.ro/fonduri_structurale/pdf/Ghid_distributie_versiune_9_Oct_2009_12102009.pdf
With effect from 1 December 2009, Articles 87 and 88 of the EC Treaty have become Articles 107 and 108,
respectively, of the TFEU. The two sets of provisions are, in substance, identical. For the purposes of this
Decision, references to Articles 107 and 108 of the TFEU should be understood as references to Articles 87 and
88, respectively, of the EC Treaty where appropriate

4 State Aid N 2/2007 Romania Regional aid map for 2007-2013 (C(2007) 112, OJ C 73 of 30 March 2007).

2.5. Sectorial scope of the scheme

(8)

The scheme is limited to the electricity and gas distribution sector as the beneficiaries have
to be the owner and/or the operator of the distribution network.
2.6. Duration of the scheme

(9)

The scheme will enter into effect after its approval by the Commission. The last date until
which the aid under the scheme can be granted is 31 December 2013.
2.7. Budget of the scheme

(10) The budget of the scheme amounts to EUR 28.400.000 out of which 88% will be cofinanced by the European Fund for Rural Development.
2.8. Beneficiaries
(11) All types of enterprises irrespective of their size (micro, small, medium5 and large) and
ownership structure can apply for aid under the scheme. The potential beneficiaries are the
owners of the distribution networks for gas or electricity or the operators of these networks
who have a license and the right to expand and/or modernise the networks.
(12) The Romanian authorities estimate a maximum number of 30 beneficiaries.
(13) The scheme will not apply to undertakings that are in difficulty in the meaning of the
Community guidelines on State aid for rescuing and restructuring firms in difficulty6.
2.9. Definition of initial investment under the scheme
(14) Aid under the scheme can be granted only for the realisation of an initial investment that
consists of the extension and/or modernisation of distribution networks of electricity and
gas aimed at reducing the losses in the network and at achieving a safe and continuous
distribution.7 The notified scheme excludes explicitly aid to replacement or repairing
investment.
2.10. Eligible projects and costs
(15) Projects with eligible costs exceeding EUR 50 million are not supported by the scheme.

Micro, small and medium-sized enterprises within the meaning of Annex I to the Commission Regulation (EC) No
800/2008 of 6 August 2008 declaring certain categories of aid compatible with the common market in application
of Article 87 and 88 of the Treaty (General block exemption Regulation), OJ L 214, 9.8.2008.

OJ C 244 of 1.10.2004, p. 2.

The Romanian authorities estimate that 100/150 km of electricity/gas distribution network will be
extended/modernized.

(16) Eligible expenditures are the cost acquisition (VAT excluded) of material and immaterial
assets directly linked to the initial investment. The material assets consist in land, buildings,
equipment or machinery. The land is eligible for aid only in a proportion of 10%.
(17) Investment in immaterial assets (patent rights, licences, know-how or unpatented technical
knowledge) is also eligible under the scheme. In the case of micro, small and medium-sized
enterprises, 100% of such immaterial costs are eligible. For large enterprises, the costs of
immaterial assets are eligible up to the amount of 50% of the total of eligible costs of the
investment. Moreover, for all sizes of undertakings, immaterial assets must be used
exclusively in the establishment receiving regional aid, must be regarded as amortisable
assets, must be purchased under market conditions from third parties and must be included
in the capital assets of the firm and remain in the establishment receiving the regional aid
for five years (3 years in case of micro, small, medium-sized enterprises).
(18) Costs of preparation of the investment (e.g. consultancy services) are only eligible in case
of micro, small and medium-sized enterprises up to the intensity of 50% of the costs
actually incurred.
(19) The acquired assets forming part of the initial investment have to be new and bought under
market conditions. Assets acquired under lease contracts are not eligible.
2.11. Starting date of the project and incentive effect principle
(20) The application for aid under the scheme must be submitted before the works on the
projects have started. In addition, before the start of works on the project, the aid granting
authority must have issued a written confirmation that - subject to a detailed verification the project qualifies for the aid.
(21) Moreover, projects for which the costs were incurred before the publication of the final
version of scheme on internet will not be eligible.
2.12. Form of the aid and aid intensity
(22) The aid under the scheme will be awarded in the form of direct grants.
(23) The aid intensity - expressed as a ratio of the gross grant equivalent of the aid and of the
eligible expenditure - is limited to the following standard aid ceilings8:
a) 40 % - in the area of Bucharest - Ilfov;
b) 50 % - in the other 7 assisted regions of Romania.
(24) In the case of microenterprises, small or medium-sized enterprises, the aid intensity referred
to above may be increased by (except the transport sector):

See Commission decision N 2/2007- Romania- Regional aid map 2007-2013.

a) 10 percentage points in the case of a medium-sized enterprise;

b) 20 percentage points in the case of a microenterprise or a small enterprise.
(25) The maximum of aid that a project can receive is limited to EUR 4 million. One beneficiary
can receive maximum EUR 8 million of aid in case he presents several eligible projects.
Own contribution
2.13. Own contribution
(26) In all cases the beneficiary will have to provide an own contribution of at least 30 per cent
of the value of the total eligible costs in a form which is free of any public support
including de minimis support9.
2.14. Maintenance of the investment
(27) The notified aid scheme requires that the beneficiary maintains the investment in the region
concerned for a minimum period of five years (three years in case of SMEs) after its
completion.
2.15. Cumulation of aid
(28) The aid under the scheme may be cumulated in relation to the same eligible costs with aid
in other forms and from other sources including de minimis support. The aid intensities
ceilings described under point 2.12 above will be respected in case of cumulation.
(29) The aid under the scheme will not be cumulated with de minimis support in order to
circumvent the maximum aid intensities laid down under point 2.12 above.
2.16. Contribution of the measure to regional development and limitation of distortion
of competition
(30) The Romanian authorities provided elements on the contribution of the measure towards a
coherent regional development strategy and that, having regard to the nature and size of the
measure, it will not result in unacceptable distortions of competition.
(31) The Romanian authorities emphasise that the notified scheme implements the objectives of
the National Development Strategy for 2007-2013 and of the Priority Axe 4 of the
Operational Programme for Competitiveness called "Increase of the energy efficiency and
of a secure supply in the context of the climate change". The scheme will target initial
investments which will contribute to the increase of energy security and efficiency and to
the diversification of the energy sources (renewable).

Commission Regulation (EC) No 1998/2006 on the application of Articles 87 and 88 to de minimis aid, OJ L 379,
28.12.2006, p. 5.

(32) The Romanian authorities underline that by means of the envisaged investments (extending
and modernising the gas and electricity distribution networks) the basic infrastructure for
attracting new investments will be created. This will contribute to the reduction of
disparities between regions in Romania and will create prerequisites for economic
development of regions where these projects will be implemented.
(33) In addition, the Romanian authorities expect by supporting these types of investments to
ensure a positive impact on regional development by creating jobs10, particularly in rural
economic activities.
2.17. Transparency and record keeping obligation
(34) The Romanian authorities confirm that detailed records regarding the granting of aid for all
projects will be maintained. Such records, which will contain all information necessary to
establish that all the conditions of the scheme have been observed, will be maintained for
10 years from the date on which the aid was granted.
3.

ASSESSMENT
3.1. State aid character of the scheme

(35) The proposed aid scheme involves the transfer of State resources by public authorities
within the meaning of Article 107(1) of the TFEU. The scheme will be co-financed using
the national resources and resources of the European Regional Development Fund which
are transferred to the Romanian authorities to implement objectives set in the Priority Axe
4 of the Operational Programme for Competitiveness. With regards of the Community
component of the scheme financing, it is noted that under the applicable regulatory
framework, the relevant Member States' authorities are responsible for the implementation
and management of the operational programmes adopted in the context of Community
support, including the selection of beneficiaries and projects as well as the disbursement of
financing. Therefore, the schemes financing from the Community Funds is imputable to the
Romanian authorities and it is also at the disposal of the Romanian authorities. Hence it can
be concluded that, irrespective of its origin, the aid under the notified scheme will be
provided through State resources within the meaning of Article 107(1) of the TFEU.
(36) The scheme confers an economic advantage to the aid beneficiaries and relieves the
undertakings from investment costs they should normally face in order to carry out these
projects.
(37) The scheme is selective since it applies only to potential beneficiaries that carry out the
initial investments foreseen in the scheme. Thus, it distorts or threatens to distort
competition.
(38) Finally, as the scheme concerns a sector and undertakings which are involved in trade
between Member States, there is a risk that the aid could affect that trade.
10

The Romanian authorities expect a creation of 50 new jobs on the basis of the notified scheme.

(39) Consequently, the proposed aid scheme constitutes aid within the meaning of Article
107(1) of the TFEU.
3.2. Legality of the aid scheme
(40) The Romanian authorities have fulfilled their obligation under Article 108(3) of the TFEU
by notifying the aid before putting it into effect. The Commission takes note of the fact that
the scheme will enter into force only after its approval by the Commission.
3.3. Compatibility of the aid scheme
(41) Having established that the notified scheme involves State aid within the meaning of
Article 107(1) of the TFEU, it is necessary to consider whether the scheme can be found to
be compatible with the internal market.
(42) The Commission has examined the proposed aid scheme in the light of the Regional Aid
Guidelines. This assessment has lead to the observations laid down below.
(43) In general, regional aid is not conceived for schemes which support a specific sector of
activity. As stated in point 10 of the RAG, where, exceptionally, it is envisaged to grant aid
confined to one area of activity, it is the responsibility of the Member State to demonstrate
that the project contributes towards a coherent regional development strategy and that,
having regard to the nature and size of the project, it will not result in unacceptable
distortions of competition.
a) contribution to the coherent regional development strategy
(44) The scheme is implementing the objective of the Priority Axe 4 of the Operational
Programme for Competitiveness approved by the Commission on 12 July 200711 which
indicates a strategy of the efficiency increase of gas and electricity supply. Moreover, the
scheme aims at realising the objectives laid down in the National Development Strategy for
years 2007-2013. Moreover, the Operational Programme constitutes one of the instruments
to achieve objectives laid down in the National Reference Framework for Romania for
2007-201312 which defines development measures to be undertaken by the Romanian
government in the period 2007-2013 in terms of promotion of sustainable growth,
competitiveness increase and employment growth. The National Reference Framework for
Romania was accepted by the Commission in 200713 which ensures that assistance from the
Community funds is consistent with the Community strategic guidelines on cohesion14.
Therefore, the projects aiming at the realisation of objectives as set out in the abovementioned documents may be considered as a contributing towards a coherent regional
11

Approved by Commission decision C (2007) 3472.

12

http://www.minind.ro/fonduri_structurale/CNSR.pdf.

13

Commission Decision of 25 June 2007 approving the national strategic reference framework for Romania.

14

OJ L 291 of 21.10.2006.

development strategy carried out by the Romanian authorities (cf. point 10 of the RAG, 3rd
sentence).
(45) As explained by the Romanian authorities, the scheme will also lead to both direct and
indirect job creation during the implementation of the investments and/or after their
completion. The scheme would also lead to the increase of the attractiveness and
competitiveness of the regions and other benefits measured in terms the increased
entrepreneurship, expansion and diversification of certain activities and improved life
standard. In this context, it is also observed that the scheme apply to all the regions of
Romania.
b) Limitation of distortion of competition
(46) In terms of the limitation of distortion of competition, it is noted by the Commission that
the level of financing on the basis of the scheme will not exceed EUR 28 400 000.
Moreover, one project can receive a maximum amount of aid of EUR 4 million and one
beneficiary maximum EUR 8 million.
(47) In light of the foregoing considerations, the Commission considers that although the
notified scheme may have some sectoral characteristics, they are on balance acceptable
since they contribute towards coherent regional development strategies of all regions of
Romania and in view of the nature of the projects and other safeguards as to the size of the
projects and the support they will not result in unacceptable distortions of competition.
Moreover, the account is also taken of other decisions concerning sectoral regional aid
schemes.15
(48) The scheme complies with the remaining relevant criteria established for investment aid in
the RAG:
The notified scheme is applicable to whole territory of Romania, which is currently
eligible for regional aid under Article 107(3)(a) of the TFEU. The applicable aid
ceilings and bonuses for small and medium-sized enterprises are in line with section
4.1.2 of the RAG and the Romanian regional aid map 2007-2013.16 The notified
scheme will expire on 31 December 2013 being in line with the duration of the
regional aid map for Romania.
In line with point 9 of the RAG, the scheme will not apply to undertakings that are in
difficulty in the meaning of the Community guidelines on State aid for rescuing and
restructuring firms in difficulty17.

15

See for instance Commission decision on schemes with similar energy-related objectives:
Latvia, N 197/2008 Lithuania, N 373/2008 Estonia, N 435/2008- Poland.

16

See footnote 4 above.

17

OJ C 244 of 1.10.2004, p. 2.

N 428/2008

 The scheme concern initial investments as defined in point 34 of the RAG as they
cover investment in material and immaterial assets in relation to the extension and/or
modernisation of distribution networks of gas and electricity. Replacement investments
are excluded from the scheme
The condition on the incentive effect as laid down in point 38 of the RAG is respected.
In conformity with point 108 of the RAG, projects for which expenses were incurred
before the date of publication of the scheme will not be eligible for regional aid.
Costs eligible for aid under the scheme relate to the costs of tangible and intangible
assets linked to investments with strictly defined objectives:
i.
The costs cover expenditure on land, buildings and plant/machinery (cf. point 50
of the RAG) and the expenditure which is strictly linked with the investment works and
is limited in time to the duration of the investment/construction works.
ii.
Specific rules relevant for leasing of land and buildings and assets other than land
and buildings are not applicable as leasing is excluded from the eligible costs under the
scheme (point 53 of the RAG).
iii. The scheme contains a clause ensuring that in case of large enterprises the costs of
investments in intangible assets as defined in point 55 of the RAG do not exceed 50 per
cent of the total eligible investment expenditure for the project; whereas in case of SMEs
100% of such costs are eligible (cf. point 55 of the RAG). Furthermore, specific
conditions ensuing that, irrespective of the size of the enterprise, the intangible assets
remain with the recipient region are respected (cf. point 56 of the RAG). Accordingly,
intangible assets are used exclusively in the establishment receiving regional aid, are
regarded as amortisable assets, are purchased under market conditions from third parties
and are included in the capital assets of the firm and remain in the establishment
receiving the regional aid for five years (three years in case of SMEs).
iv. In line with point 51 of the RAG, the costs of preparatory studies and consultancy
costs linked to the investment are only eligible in case of micro, small and medium-sized
enterprises up to an intensity of 50% of the actual costs incurred.
v.
In line with point 54 of the RAG, the scheme ensures that the acquired assets must
be new (the Romanian authorities go beyond the provision of the RAG as it is required
also for SMEs that the assets are new).
The aid beneficiarys own contribution to the financing of the aided investment will be
at least 25% and that this contribution will be free of any public support, including de
minimis support,in accordance with paragraph 39 of the RAG.
The investment has to be maintained for at least 5 years (three years in case of SMEs)
after its completion in accordance with paragraph 40 of the RAG.
The rules on cumulation under the scheme are in line with the provisions of Section
4.4. of the RAG.
9

 The scheme excludes aid for projects with eligible costs above 50 million. Thus, the
specific provisions for large investment projects are not applicable.
Assistance to beneficiaries which are subject to an outstanding recovery order
following a previous Commission decision declaring the aid illegal and incompatible
with the common market is excluded from the scheme as long as the aid was recovered
and the interest rates have been paid.
(49) In view of the above, the Commission considers that the notified aid scheme is compatible
with the internal market in accordance with Article 107(3)(a) of the TFEU.
4.

DECISION

(50) The Commission has accordingly decided to consider the notified aid scheme as compatible
with the internal market in accordance with Article 107(3)(a) of the TFEU.
(51) The Commission reminds the Romanian authorities that the reporting conditions described
in the Commission Regulation (EC) No. 794/2004 implementing Council Regulation (EC)
No. 659/1999 laying down detailed rules for the application of Article 93 of EC Treaty18
have to be respected.
(52) The Commission reminds the Romanian authorities that the principles established under
Directive 2003/5519 and Regulation 1775/200520 (gas sector), and Directive 2003/5421 and
Regulation 1228/200322 (electricity sector) in particular transparency and equal treatment
among undertakings, with respect to construction and putting into operation of the new
infrastructure, should be respected. Furthermore, the Commission reminds the Romanian
authorities that Article 54 (5) of Regulation 1083/200623 which states that "An expenditure
18

OJ L 140, 30.4.2004, p. 1.

19

Directive 2003/55/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules
for the internal market in natural gas and repealing Directive 98/30/EC, OJ L 176 of 15.7.2003, p.57.

20

Regulation (EC) No 1775/2005 of the European Parliament and of the Council of 28 September 2005 on
conditions for access to the natural gas transmission networks, OJ L 289 of 3.11.2005, p. 1.

21

Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules
for the internal market in electricity and repealing Directive 96/92/EC - Statements made with regard to
decommissioning and waste management activities, OJ L 176 of 15.7.2003, p. 37-56.

22

Regulation (EC) No 1228/2003 of the European Parliament and of the Council of 26 June 2003 on conditions for
access to the network for cross-border exchanges in electricity, OJ L 176 of 15.7.2003, p.1.

23 Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European
Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC)
No 1260/1999, OJ L 210 of 31.7.2006, p.25.

10

co-financed by the Funds shall not receive assistance from another Community financial
instrument" should be respected.
(53) The Commission further reminds the Romanian authorities that all plans to modify this aid
scheme have to be notified to the Commission.
(54) The Commission notes that the Romanian authorities have confirmed that the notification
does not contain confidential information and agreed with the publication of the full text on
on
the
Internet
site:
http://ec.europa.eu/community_law/state_aids/state_aids_texts_ro.htm..

Yours faithfully,
For the Commission

Neelie KROES
Member of the Commission

11