EC endorses support of ethylene pipeline to Bavaria
13 Oct '06
3 min read
The European Commission (EC) has approved under EC Treaty state aid rules a direct subsidy that the German Land of Bavaria intends to grant to EPS (Ethylene Pipeline Süd GmbH & Co KG), a consortium of German petrochemical companies, for the construction of an ethylene pipeline.
The planned aid amounts to 29.9 percent of the total eligible costs of the investment, up to a maximum aid level of €44.85 million. The Commission considers that this project is an important step towards the realisation of a pan-European ethylene pipeline network, but does not unduly distort competition.
EU Competition Commissioner Neelie Kroes said: “The Bavarian pipeline will constitute an important link between existing networks in Western Europe and 'inland islands' in Central Europe.
Now, that Germany has agreed to reduce the aid level from 50% to 30%, I am satisfied that the advantages of the aid will outweigh a possible distortion of competition. Even aid which is granted for a valid objective should be limited to what is strictly necessary.”
In January 2005, Germany notified the intention of the Land of Bavaria to support with €70 million the construction of an ethylene pipeline by the EPS consortium. The total construction cost was evaluated at €140 million. The Commission decided in March 2005 to launch an in-depth investigation to establish whether this grant was compatible with EC Treaty state aid rules.
The Commission doubted whether the aid measure struck the right balance between the common European interest in the project and the distortion of competition to the detriment of the chemical industry in the rest of the EU, since the aid appeared to benefit primarily the petrochemical industry in Bavaria.
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