The European Commission (EC) has initiated an in-depth investigation into the planned restructuring at the Romanian coal and power complex CE Oltenia (CEO), expressing doubts about the process.

The plan should meet the principal conditions of the 2014 Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty (R&R Guidelines) to be declared compatible with the internal market regulations.

The Commission asked Romania to submit its comments and provide all the information that may help it assess the restructuring aid within one month.

Greenpeace Romania stresses that CEO must pay EUR 266 million for the emission rights related to 2020 production by the end of April. Unless Romania manages to have the restructuring plan approved by the EC, which Greenpeace believes is impossible, the dues the company owes in the account of the 2020 emission certificates will increase toward EUR 1 billion (including penalties).

The doubts expressed by the European Commission are quite significant and hard to address, particularly upon such short notice.

CEO is not ready to contribute to financing the restructuring plan, and the stakeholders (shareholders and creditors) are not prepared to share the burden, the Commission claims.

The Commission preliminarily concluded that the sources of financing as proposed by Romania do not constitute a significant, real, and actual, free of aid own contribution of at least 50%.

Simultaneously, there is no adequate burden-sharing by the existing shareholders and creditors foreseen in the restructuring plan. Therefore, the Commission considers that the restructuring plan as it currently stands does not correspond to the basic requirements of the R&R Guidelines regarding the own contribution and burden-sharing.

The restructuring plan does not restore long-term viability, the Commission also claims. Moreover, the compensatory measures aimed at mitigating the risks of the aid on competition are insufficient, the Commission argues.

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iulian@romania-insider.com