DIn view of the war in Ukraine, Germany is allowed to support energy-intensive companies with state aid of up to five billion euros. The EU Commission approved a corresponding regulation on Thursday. The Brussels authority announced that the aid was necessary, appropriate and proportionate.
In a joint statement by the finance and economics ministries, it was said that the Federal Office of Economics and Export Control (Bafa) would take care of the implementation. In undisputed cases, the first installment payments of a large part of the funded amount should be possible within weeks. The money should flow by the end of the year at the latest. The final subsidy and any repayments in the event of new information on the economic development of the company should then be clarified from 2023.
The aid consists of grants of up to 50 million euros per company. This should at least partially cushion extreme loads. In order to receive the aid, companies must prove that their gas and electricity costs more than doubled between February and September 2022 compared to 2021. The program is aimed at industries in the chemical, glass, steel, metals and ceramics sectors, among others. Companies that receive help are not allowed to pay any bonuses during this time.
No bonuses for the bosses
The grants are part of a larger bailout package the federal government set up in response to the Russian attack on Ukraine. Since then, energy prices have skyrocketed, gas is becoming a scarce commodity and could be rationed in the coming months. In order to keep companies liquid, special loans are already possible through the KfW development bank. In addition, state guarantees were expanded. And there are hedges for transactions on the electricity and gas exchanges. The grants are now the fourth pillar of the aid package.
The program was announced in early July. With state subsidies, the federal government wants to avoid bankruptcies of companies that consume a lot of energy, since prices have risen sharply in the wake of the war. Commenting on the situation in Ukraine, EU Competition Commissioner Margrethe Vestager said: “Energy- and trade-intensive companies have been hit particularly hard by the current geopolitical crisis and the resulting rise in energy prices.”
If the state wants to use tax money to help domestic companies, strict EU rules apply, which are monitored by the Commission. This is to ensure that there is no distortion of competition. Rules have been relaxed to cushion the impact of Russia’s war on Ukraine and EU sanctions.
