Romanian rescue loan broke EU rules, inquiry finds

CNU, which is a fully state-owned company, operates a mine site at Crucea-Botusana in Suceava County in north-eastern Romania and a processing and refining plant in Feldioara in the central region. It has been in financial difficulty since the loss of its main client, Romanian nuclear energy producer Societatea Nationala Nuclearelectrica (SNN), the EC said. In 2017, Romania notified the EC of a plan to restructure CNU, including some EUR93 million of public support. This followed the "urgent" rescue loan of EUR13 million which was temporarily approved by the EC in September 2016, which two years later opened an investigation to assess whether state aid rules had been met.

Margrethe Vestager, EC commissioner for competition, said: "A government can support a company in financial difficulty if the company has a sound restructuring plan which ensures its return to long-term viability, contributes to the cost of its restructuring and competition distortions are limited. In the case of CNU, these conditions were not met. As a result, Romania cannot further support the company. It must also recover the aid already granted. This will restore the competitive situation in the market and ensure that CNU does not compete unfairly with other more efficient operators. It will also prevent CNU from maintaining inefficient loss-making operations, which could eventually lead to higher electricity prices and a higher cost to the Romanian taxpayers."

In April last year, Romania submitted an amended restructuring plan for CNU which envisaged overall public support of EUR38 million, including the non-reimbursement of the 2016 rescue loan. The EC investigation has now concluded the plan is not in line with EU state aid rules and cannot be implemented. The "prolonged" 2016 loan - which should have been repaid within six months - is also incompatible with EU rules and needs to be recovered with interest, it said.

Should CNU be unable to pay back the aid, it should "in principle cease economic activities and eventually be liquidated", the EC said.

According to World Nuclear Association, CNU had been producing about 50 tU per year from the Crucea-Botusana mines but that ceased in 2017. SNN subsidiary Fabrica de Combustibil Nuclear produces fuel for Romania's Cernavoda nuclear power plant at its Pitesti facility using uranium purchased from abroad.