The European Commission has approved Romania’s plans to grant a EUR 251 million loan to second-biggest power producer Complexul Energetic Oltenia (CE Oltenia) but with strict conditions.
The Romanian government has defined a plan to help Complexul Energetic Oltenia (CE Oltenia), coal-based utility trapped in a financial squeeze for years. A public loan warrants approval from the European Union’s executive arm.
The loan will either be fully repaid or CE Oltenia will undertake a comprehensive restructuring in order to return to viability in the long term or be liquidated
It has approved, under EU state aid rules, Romania’s plans to grant a EUR 251 million temporary loan to Romanian state-owned lignite miner and power producer CE Oltenia, which is currently experiencing financial difficulties, according to a press release from the commission.
CE Oltenia has 3.2 GW in electricity capacity. The commission ruled the loan is specifically “for the company’s well identified liquidity needs.”
Minister Virgil Popescu said it is impossible for CE Oltenia to repay the money
Furthermore, Romania committed to ensuring that, after six months, the loan will either be fully repaid, or CE Oltenia would undertake a comprehensive restructuring in order to return to viability in the long term or be liquidated, commissioners said.
Romania-insider reported minister of economy and energy Virgil Popescu said it is impossible for CE Oltenia to repay the money.
He added the utility would shut down 1.3 GW coal-fired power plant capacity by 2026 and replace them with gas facilities of 1.45 GW and a wind farm.
Saving 13,000 jobs
The regulators also found the aid would serve common interest.
The loan will mitigate the risk of an insolvency process, which would lead to the potential loss of 13,000 jobs in a region already characterized by relatively high unemployment levels, the commission said.
It stressed the state aid decision doesn’t challenge the need for Romania to meet its legal obligations in terms of air quality and that it doesn’t imply the EU recommends the use of lignite as a fuel, given its negative impact on air quality and climate.