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French loan guarantees to TVO 'not aid'

Friday, 28 September 2007

[EC, 26 September] Following an in-depth competition investigation, the European Commission (EC) has concluded that a guarantee of the French government insuring a loan granted to Finnish utility Teollisuuden Voima Oy (TVO) does not constitute state aid. The guaranteed loan finances the purchase by TVO of a part of the new Olkiluoto 3 nuclear power plant from Areva NP. The EC concluded that the loan guarantees did not break EU state-aid rules because they were deemed to give no advantage to TVO over its competitors. It also concluded that the cost of the guaranteed loans were not below the cost for loans on the market. TVO concluded an agreement in December 2003 with a consortium comprising Areva and Siemens for the construction of Olkiluoto 3. The global amount of the turnkey project was estimated at Eur3 billion ($4.25 billion). In order to finance this project, TVO raised fresh equity capital from its shareholders and concluded loans. One of the latter, of an amount of Eur570 million ($806 million), is guaranteed by Coface, the company that manages the export-credit insurance on behalf of the French government. For this guarantee, TVO pays a fee to the government, the 'guarantee premium'. EU Competition Commissioner Neelie Kroes said, "Neither Areva nor TVO have derived an unfair advantage from the state guarantee, which does not constitute state aid." The EU launched its investigation into the loan guarantees in Ocober 2006 after complaints that French help for TVO was a government subsidy, banned under EU rules.

[EC, 26 September] Following an in-depth competition investigation, the European Commission (EC) has concluded that a guarantee of the French government insuring a loan granted to Finnish utility Teollisuuden Voima Oy (TVO) does not constitute state aid. The guaranteed loan finances the purchase by TVO of a part of the new Olkiluoto 3 nuclear power plant from Areva NP. The EC concluded that the loan guarantees did not break EU state-aid rules because they were deemed to give no advantage to TVO over its competitors. It also concluded that the cost of the guaranteed loans were not below the cost for loans on the market. TVO concluded an agreement in December 2003 with a consortium comprising Areva and Siemens for the construction of Olkiluoto 3. The global amount of the turnkey project was estimated at Eur3 billion ($4.25 billion). In order to finance this project, TVO raised fresh equity capital from its shareholders and concluded loans. One of the latter, of an amount of Eur570 million ($806 million), is guaranteed by Coface, the company that manages the export-credit insurance on behalf of the French government. For this guarantee, TVO pays a fee to the government, the 'guarantee premium'. EU Competition Commissioner Neelie Kroes said, "Neither Areva nor TVO have derived an unfair advantage from the state guarantee, which does not constitute state aid." The EU launched its investigation into the loan guarantees in Ocober 2006 after complaints that French help for TVO was a government subsidy, banned under EU rules.

Further information

Areva
TVO

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