The Ministry of Energy, Sebastian Burduja, recently announced that he has initiated steps to provide state aid, starting in January 2024, to major energy consumers in Romanian industry. However, question marks arise in a situation where the state aid scheme is to be managed by the Ministry of Economy, not the Ministry of Energy, as well as in conditions where one of the main beneficiaries will be a company where his father Marinel Burduya is an administrator.

Alro, one of the beneficiaries

The state aid scheme for large energy consumers has a long history, dating back to 2014, and was born after strong lobbying by companies such as Alro and Arcelormittal Galati, now Liberty Galati. Alro, a company controlled by Russian oligarch Vitaly Machitsky, has on its board Marinel Burduja, the minister’s father, best known for his position as vice president of Bancorex, a bank that failed in the 1990s.

In fact, Sebastián Burduja wants to extend this state aid scheme as it expires this year. However, so far this state aid has been initiated and managed by the Ministry of Economy through GD 495/2014, provided that the beneficiaries are companies in the industry. It is not clear why the Energy Secretary would want to deal with the scheme, especially as it would put him in a possible conflict of interest given that one of the beneficiaries was and will be Alro.

HotNews.ro asked questions about this and will publish the answers as soon as they are available.

How Sebastian Bourduya sees the state aid scheme

Sebastien Bourduilla said that the state aid will consist of a 75%-85% reduction in the payment of green certificates, and the number of beneficiary companies will be 200. “In particular, we have started steps to expand the aid provided in the form of the exemption of some end users from the application of the law 220/ 2008 on the creation of a system of promotion of energy production from renewable energy sources for a period of 8 years, starting from January 2024 until the end of 2031,” said the Minister of Energy.

It says that following consultations with the Competition Council and the National Energy Regulatory Authority (ANRE), the final form of the state aid scheme has been finalized and is in the internal approval stage and will be published on the Ministry of Energy’s website for public consultation as soon as possible.

The total budget of the state aid scheme will be 750 million euros, and the aid granted will not exceed 150 million euros each year.

Controversies behind the state aid scheme

The form of state aid described by the minister is not much different from the one used until now in GD 495/2014.

In 2014, HotNews.ro wrote how Ponta’s government approved the scheme under constant pressure from large energy consumers such as Alro and Arcelormittal Galati. Until 2012, they were on the list of known “smart energy companies” who benefited from cheap, below-market electricity from Hidroelectrica. Starting in 2012, after Hidroelectrica became insolvent, these large consumers found themselves in a situation where they had to pay for energy at the market price, and then they started lobbying hard for this state aid scheme, which in 2014 took the form of HG 495, signed the then Minister of Economy Konstantin Nice.

HG 495/2014 provides for the application of the scheme for ten years, which means that it ends in 2023, for about 300 consumers, the cost of the aid is estimated at 750 million euros. HotNews.ro wrote that the burden of this amount was transferred to other consumers who are not among the 300.

The Ministry of Economy, as the implementing body of the state aid scheme, shall, for 10 years from the date of grant, keep detailed records of the aid granted under this state aid scheme, which contain all the necessary information to determine whether the criteria set out in the Recommendations have been met.

The European Commission agreed to this state aid, but under certain conditions: the beneficiaries must make investments in energy efficiency, provide evidence of their achievement, and the Ministry of Economy, which administers the aid, must analyze the files and approve them. However, there are reports that these beneficiaries are not verified whether they have made the investment or not as they claim when they submit their exemption requests.

According to GD 495/2014, public aid is granted on the condition that aid beneficiaries pay at least 15% of the number of green certificates associated with the mandatory quota, without the reduction provided by this exemption scheme.

Depending on the electricity capacity of the companies, the beneficiaries will pay the following percentages of the number of green certificates associated with the mandatory quota:

• a) 15% in case of electrical intensity more than 20%;
• b) 40% in case of electrical intensity between 10-20%;
• c) 60% in case of electric intensity between 5-10%.