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State Aid

State Aid: No aid involved in Narvik's sale of concession power to Narvik Energi AS

19.6.2013

PR(13)54

Today, the EFTA Surveillance Authority closed its formal investigation in a complaint case concerning a contract between Narvik Municipality and Narvik Energi AS. The Authority's conclusion is that no state aid was involved.

In October 2000 Narvik municipality transferred its rights to concession power to Narvik Energi AS for 50.5 years for a fixed price. It is very unusual to sell power for such a long period of time without including the possibilities of price adjustments in the contract. Over such a long period of time, even small changes in the price of power can have a significant impact on the value of such rights. Upon receiving a complaint, the Authority opened the formal investigation as it had doubts as to whether Narvik Energi AS receives state aid through the contract.

The Authority recommends that public entities that are engaged in economic activities and operate on a market should do so under similar terms and conditions as other operators on the market. “To avoid state aid implications when selling concession power, municipalities can sell the power on Nordpool or such contracts may be advertised in the market. Longer contracts should include price adjustments clauses”, says the president of the Authority, Oda Helen Sletnes.

The Norwegian authorities have argued that the sale of concession power for a period of 50.5 years can be compared with the sale of hydro power plants. Moreover that the municipality based its sale on similar value assessments and expectations concerning future power prices as a number of hydro power plant owners did when they sold their plants in the relevant time period.

The Authority has carried out a thorough comparison of the sale of the concession power to the sale of hydro power plants that were sold in the same period. The Authority has also considered the special circumstances that led Narvik Municipality to decide that the upfront sale of the right to the concession power for such a long period of time was its best option. The Authority concluded on that basis that the contract did not involve state aid.

A non-confidential version of the Authority's decision to close the formal investigation will be published in the state aid register on the Authority's website, normally within a month.

 

For further information, please contact:

Mr. Per Andreas Bjørgan
Director, Competition and State Aid Directorate
tel. (+32)(0)2 286 18 36




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