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State aid: Commission opens in-depth investigation into Lithuanian measure to compensate Litgas for operation of LNG terminal

The European Commission has opened an in-depth investigation to assess whether the compensation granted by Lithuania to Litgas UAB (‘Litgas') for supplying a mandatory quantity of liquefied natural gas (‘LNG') to the LNG terminal in Klaipėda between 2016 and 2018 is in line with EU State aid rules. The in-depth investigation follows the General Court's partial annulment of a previous Commission decision approving the compensation to Litgas for the period in question.

The Commission's investigation

In November 2013, the Commission approved a Lithuanian measure to support the construction and operation of an LNG terminal in the Klaipėda Seaport. In October 2018, the Commission approved two amendments to the measure notified by the Lithuanian authorities:

  1. the 2016 amendments covering the period from 2016 to 2018, entrusting Litgas with a service of general economic interest (“SGEI”) for the provision of a mandatory quantity of LNG to the Klaipèda LNG terminal and introducing a compensation to the benefit of Litgas; and
  2. the 2019 amendments covering the period from 2019 to 2024, abolishing the obligation on heat and electricity generators to purchase a certain quantity of LNG from Litgas and introducing a new methodology for calculating the compensation of the SGEI entrusted to Litgas.

The Commission found both amendments to be compatible with EU State aid rules, and in particular with the 2012 Service of General Economic Interest (‘SGEI') Framework.

On September 2021, the General Court partially annulled on procedural grounds the 2018 Commission decision as regards the 2016 amendments but uphold it as regards the 2019 amendments. The General Court concluded that the Commission should have opened an in-depth investigation to assess the compatibility of the 2016 amendments with the internal market, in particular regarding the compensation between 2016 and 2018 for the entirety of the boil-off and balancing costs incurred by Litgas.

Following the General Court's judgment, the Commission has re-examined the compatibility of the 2016 amendments and has decided to open an in-depth investigation under EU State aid rules. In particular, the Commission has doubts on whether it was necessary to compensate the full boil-off and balancing costs under the 2016 amendments for the period in question, while the former were only partially compensated and the latter were no longer compensated under the 2019 amendments.

The Commission will now investigate further to determine whether the amount of compensation received by Litgas for the period 2016-2018, in particular regarding  the  boil-off and balancing costs, is in line with the SGEI Framework.

The opening of the in-depth investigation gives Lithuania and other interested parties the opportunity to submit their comments. It does not prejudge the outcome of the investigation.

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