site.btaEuropean Commission Approves Public Support for Bulgaria-Greece Interconnector

117 POLITICS-GAS INTERCONNECTOR-BULGARIA-GREECE

European Commission
Approves Public Support
for Bulgaria-Greece Interconnector


Brussels, November 8 (BTA correspondent Nikolay Jeliazkov) - The European Commission said it assesses positively plans for a natural gas interconnector between Bulgaria and Greece in a statement on Thursday.

The Commission has found Bulgarian and Greek plans to support the construction and operation of a natural gas interconnector to be in line with EU State aid rules. The project will contribute to the security and diversification of EU energy supplies without unduly distorting competition.

Commissioner Margrethe Vestager, in charge of competition policy, said: "We have approved the support measures to be granted by Bulgaria and Greece because they are limited to what is necessary to make the project happen and therefore are in line with our State aid rules."

The measures approved today by the Commission will support the construction and operation of a 182 kilometres cross-border gas interconnector (called "IGB") between Greece (Komotini) and Bulgaria (Stara Zagora). The gas interconnector is designed to transport 3 billion cubic meters/year (bcm/y) of natural gas from Greece to Bulgaria by 2021. A potential later phase of the project could increase this capacity to 5 bcm/y and allow physical reverse flow capacity from Bulgaria to Greece.

IGB will be owned by ICGB AD, a 50-50 joint venture between the IGI Poseidon consortium (which includes Edison of Italy and Greek gas incumbent DEPA) and BEH, the Bulgarian gas incumbent.

The total investment cost for the realisation of the IGB interconnector amounts to 240 million euro. This will be financed through a direct equity contribution of 46 million euro from the joint venture shareholders; a contribution of 45 million euro from the European Energy Programme for Recovery (EEPR), which is centrally managed by the European Commission; a loan of 110 million euro granted by the European Investment Bank (EIB) to BEH (and subsequently passed-on to ICGB AD); and a direct financial contribution of 39 million euro from the Bulgarian State budget via the Bulgarian Operational Programme "Innovation and Competitiveness" 2014-2020.

Bulgaria and Greece notified the Commission of the following measures to support the investment, which involve State aid within the meaning of EU State aid rules: an unconditional state guarantee to be granted by the Bulgarian State to BEH to cover the 110 million loan euro that the company will receive from the EIB, a 39 million euro direct financial contribution by Bulgaria via the Bulgarian OPIC programme, and a fixed corporate tax regime that will apply to ICGB AD for 25 years from the start of commercial operations and will be governed by an intergovernmental agreement between Bulgaria and Greece.

The Commission assessed these support measures under EU State aid rules, in particular its 2014 Guidelines on State Aid for Environmental Protection and Energy. The Commission found that the project will contribute to further key strategic objectives of the EU. A financial analysis of the project carried out by the Commission has shown that recouping the investment costs exclusively from the tariffs charged to use the interconnector would not be feasible.

LI/PP