WIREDGOV

The European Commission has approved a €1.5 billion Belgian guarantee scheme to support gas and electricity suppliers in the context of Russia's war against Ukraine. The scheme was approved under the State aid Temporary Crisis Framework, adopted by the Commission on 23 March 2022, and amended on 20 July 2022, based on Article 107(3)(b) of the Treaty on the Functioning of the European Union (‘TFEU'), recognising that the EU economy is experiencing a serious disturbance.

Executive Vice-President Margrethe Vestager, in charge of competition policy, recently said:

“In the context of economic uncertainty caused by the current geopolitical crisis, this €1.5 billion guarantee scheme will enable Belgium to provide liquidity support to natural gas and electricity suppliers and to their intermediaries, allowing them to continue their activities. We continue to stand with Ukraine and its people. At the same time, we continue working closely with Member States to ensure that national support measures can be put in place in a timely, coordinated and effective way, while protecting the level playing field in the Single Market.”

The Belgian liquidity support measure

Belgium notified to the Commission, under the Temporary Crisis Framework, a €1.5 billion guarantee scheme to provide last-resort liquidity support to electricity and gas suppliers and their intermediaries in the context of Russia's war against Ukraine.

The measure will be open to natural gas and electricity suppliers as well as to their intermediaries holding a license for the supply of electricity and/or natural gas to end-users in Belgium. In order to be eligible, these companies should not be in financial difficulties at the moment they apply for aid.

The gas and electricity price increase caused by the current geopolitical crisis as well as the lack of liquidity, linked among others to payment delays by the end-consumers, result inevitably in an increased demand for working capital by energy suppliers.

In addition, banks, credit institutions and insurers are confronted with large requests for additional credit lines and are less willing to take on risk in this sector.

A default of a supplier or an intermediary could have a serious cascade effect on the wider energy market and on the security of supply. Intervening in this crisis situation, through the granting of a state guarantee enabling the beneficiaries to access the required liquidity, is therefore necessary for the stability of the energy markets and for the security of supply.

Under the scheme, the guarantees will be granted by the Ministry of Energy and will cover new working capital loans for a maximum of two years.

The Commission found that the Belgian scheme is in line with the conditions set out in the Temporary Crisis Framework. In particular, (i) loans granted under the measure relate only to working capital needs; (ii) the flat rate guarantee premiums respect the minimum levels set out in the Temporary Crisis Framework and will cover maximum 70% of the loan principal; (iii) the maximum loan amount per beneficiary for which a guarantee can be granted respects the conditions set out in the Temporary Crisis Framework; (iv) the losses will be sustained proportionally and under the same conditions by the credit institution and the State; and (v) the aid will be granted by 31 December 2022 at the latest.

The Commission therefore concluded that the Belgian guarantee scheme is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Crisis Framework.

On this basis, the Commission approved the aid measure under EU State aid rules.

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