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State Aid

State aid: Green light given to Norwegian power guarantee scheme

2.3.2011

 

PR(11)11

The Authority has today decided that the Norwegian guarantee scheme for purchase of electricity on long term contracts does not entail any state aid.


The scheme enables certain power intensive industries to benefit from a state guarantee for their payment obligations when entering into long term power contracts. The guarantee can cover up to 80% of the payment obligations of contracts lasting from 7 to 25 years. The scheme will be managed by GIEK (Garanti-instituttet for eksportkreditt).

The calculation of the guarantee premiums will be made on a case-by-case basis. GIEK will assess the different risk factors, such as the profitability and solidity of the buyers and future development of power markets. GIEK will also require remuneration for the capital and coverage of its administrative costs.  In addition, GIEK may require different types of collateral. 

Assessment of the risks involved is challenging due to the absence of corresponding long term guarantees in the financial market today. Nevertheless, the Authority considers that the model proposed by the Norwegian authorities provides for a realistic assessment of the risks. The model will in all likelyhood secure that the premiums charged will be in line with market pricing and that the scheme will be self-financing in the long run and, consequently, operate without state aid. The model for calculation of the premiums will be reviewed at least once a year to ensure that the scheme will be self-financing in the long run. This will also be the subject of an annual review by an independent expert.

On the basis of the detailed information and assurances provided by the Norwegian authorities, the Authority has concluded that the scheme excludes the presence of state aid in line with the relevant provisions of its Guidelines on state guarantees.

 

For further information, please contact:

 

Per Andreas Bjørgan
Director

Competition and State Aid
tel. (+32)(0)2 286 18 36




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