EC probes 'state aid' for Romanian uranium company
10 May 2018
The European Commission (EC) has launched an investigation into whether public support received by Romania's National Uranium Company (Compania Nationala a Uraniului SA, CNU) is in line with European Union state aid rules. Romania notified the Commission in June last year of a restructuring plan for the company, which has been in financial difficulty since the loss of its main customer, nuclear utility Societatea Nationala Nuclearelectrica SA.
State-owned CNU has two operating sites: a uranium mine at Crucea-Botusana in the northeast of Romania and a mill and processing plant in Feldioara in Transylvania. The company's primary customer had been Nuclearelectrica, operator of Romania's two Candu reactors at Cernavoda. However, in 2016, Nuclearelectrica cancelled its contract with CNU and signed a uranium procurement contract with Cameco, claiming the Canadian company's offer had a price substantially lower than that of CNU.
The Romanian government made an urgent rescue aid loan of some EUR13.3 million to keep CNU afloat, which the EC temporarily approved on 13 September 2016. Under EU rules, state aid may be granted for a period of six months. Beyond that, the aid must be reimbursed or a restructuring plan submitted to the EC for approval.
Romania's restructuring plan calls for about EUR95 million (USD113 million) of support to CNU in the form of grants, subsidies, debt write-off and debt-to-equity conversion. The plan is to: extend the initial rescue loan of EUR13.3 million; grant EUR16.2 million to support investments for the modernisation of CNU; write-off public debt of EUR16.6 million; convert CNU's public debt of EUR2.9 million into CNU shares held by the state; and give CNU an operating subsidy of EUR45.8 million to cover the difference between its production costs and market prices over the restructuring period.
The EC said that EU state aid rules only allow state support for a company in financial difficulty under specific conditions. In particular, the company must be subject to a "sound" restructuring plan that will ensure its long-term viability. The company must also contribute to the costs of its restructuring. Any competition distortions resulting from the state support must also be limited.
"At this stage, the Commission has doubts that the planned restructuring aid is in line with these conditions," the EC said in a statement on 8 May.
The Commission said it will examine whether the proposed restructuring plan could restore CNU's long-term viability without continued state aid. It will also determine whether CNU or market investors are sufficiently contributing to the restructuring costs and if Romania is limiting the distortions of competition created by the aid.
Researched and written
by World Nuclear News