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Polish Briefing 1 August, 2019 9:00 am   
COMMENTS: Mateusz Gibała

Polish Briefing: A Croatian twin of the Polish LNG terminal obtained permission for public aid

What goes on in Poland on the 1st of August.

A Croatian twin of the Polish LNG terminal obtained permission for public aid

The European Commission has recognized that the Croatian project for the construction and operation of the LNG terminal on the island of Krk complies with the EU public aid rules. – The project will contribute to security and diversification of energy supplies without unduly distorting competition – emphasizes the European Commission in a press release.

Consent for public aid obtained

Commissioner Margrethe Vestager, responsible for competition policy, stressed that the new LNG terminal in Croatia would increase security of energy supply and increase competition for the benefit of citizens in the region. – We have approved the support measures to be granted by Croatia. They are limited by law, which is why it was necessary to examine the implementation of the project and whether it complies with our state aid rules – said the outgoing Commissioner.

The approved measures are to support the construction and operation of a floating LNG terminal, consisting of a floating storage and regasification unit (FSRU) and connections with the national gas transmission network. The LNG terminal will be able to regasify 2.6 billion cubic meters of gas annually and send the raw material of the national transmission network of Croatia from 2021.

The Commission notes that the public aid decision is without prejudice to Croatia’s commitment to comply with other EU law, in particular to ensure that the project meets all the requirements of EU environmental legislation (including the EIA Directive).

Financing

The total investment costs associated with the construction of the terminal amount to 233.6 million euros. The project will be financed by:

– Direct capital contribution of 32.2 million euro from the shareholders of the company responsible for the LNG terminal;
– A contribution of EUR 101.4 million from the Connecting Europe Facility, managed by the European Commission, through the Innovation and Networks Executive Agency (INEA);
– A direct financial contribution of EUR 100 million from the Croatian state budget.

In addition, Croatia will grant a tariff compensation called ‘payment for security of supply’. It is financed from fees charged by the gas transmission system operator from gas consumers along with tariffs for gas transmission. This is the case when revenues from terminal charges are not sufficient to cover operating costs.

– Croatia notified the Commission of a direct financial contribution of EUR 100 million, as well as a payment for security of supply. Both support measures include state aid based on EU legislation – the Commission states in a press release.