The European Commission has found that Romanian petrochemical company Oltchim, in which the Romanian State has a controlling stake of 54.8%, received around EUR 335 million of incompatible aid from Romania, since the company’s failed privatisation in September 2012. In January 2013, Oltchim was declared insolvent, a release posted on the EC website reads.
In April 2016 the Commission opened an in-depth investigation to establish whether several Romanian measures in support of Oltchim were in line with EU State aid rules, specifically: (i) the non-enforcement and further accumulation of debts owed by Oltchim to the Romanian Authority on managing State assets (AAAS) after Oltchim’s failed privatisation in September 2012; (ii) debt cancellations of more than €300 million by AAAS and various State-owned enterprises; and (iii) continued supplies by the Romanian State and State-owned enterprises (CET Govora and Salrom) to Oltchim without payment, despite the company’s deteriorating financial situation.
The Commission found that the Romanian public support measures constitute State aid within the meaning of EU rules since no private market creditor would have agreed to write-off Oltchim’s existing debts or provide further supplies to Oltchim under the same terms as AAAS and other State-owned creditors did in 2015. The Commission then assessed these measures under the 2014 Guidelines on State aid for rescue and restructuring and found that the public funding granted by Romania to Oltchim is incompatible with EU State aid rules and needs to be recovered by Romania, since no restructuring plan was notified to the Commission and there was no discernible contribution from investors to the restructuring costs of the company. To determine whether aid has been passed on to new owners in an asset sale, the Commission assesses whether there is economic continuity between the new and previous owner. In light of the terms of Oltchim’s amended sales process and its outcome, the Commission has concluded that the buyers of Oltchim’s assets do not benefit from past aid granted to Oltchim because they have acquired the assets on market terms.
This means that the responsibility to repay the aid remains with Oltchim. Commissioner Margrethe Vestager, in charge of competition policy, said: “Over the years, Oltchim has benefitted from the waiver of significant amounts of public debts. Our investigation found that these measures gave the company an unfair economic advantage in breach of EU State aid rules, which Romania must now recover. At the same time, the sale of most of Oltchim’s assets on market terms can ensure a sustainable future for the company’s economic activities, without the need for further public support.”