European Commission approves state support for natural gas interconnector between Greece and Bulgaria

European Commission approves state support for natural gas interconnector between Greece and Bulgaria

The European Commission said on November 8 that Bulgarian and Greek plans to support the construction and operation of a 182km cross-border gas interconnector (“IGB”) between Komotinin in Greece and the Bulgarian town of Stara Zagora to be in line with EU state aid rules.

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 IGB interconnector, which is designed to transport three billion cubic meters/year (bcm/y) of natural gas from Greece to Bulgaria by 2021, is 240 million euro.

Bulgaria and Greece notified the Commission of certain support measures to ICGB AD, which involve state aid within the meaning of EU state aid rules.

These include an unconditional state guarantee to be granted by the Bulgarian state to cover a 110 million euro loan that ICGB AD will receive from the European Investment bank; a 39 million euro direct financial contribution by Bulgaria via the Bulgarian Operational Programme “Innovation and Competitiveness” 2014-2020; (OPIC) 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 said that it had assessed these measures under EU state aid rules, in particular its 2014 Guidelines on State Aid for Environmental Protection and Energy and concluded that “the measures are in line with EU state aid rules and will contribute to the objectives of security of supply, diversification of energy sources and increased competition in EU energy markets”.

European Commissioner Margrethe Vestager, in charge of competition policy, said: “The new gas interconnector between Greece and Bulgaria will increase the security of energy supply and enhance competition, to the benefit of citizens in the region.

“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,” Vestager said./IBNA