Subject: State aid SA (2010/N) Slovenia Aid to compensate damages from floods in September 2010

Transcription

1 EUROPEAN COMMISSION Brussels, C(2011) 3224 final PUBLIC VERSION WORKING LANGUAGE This document is made available for information purposes only. Subject: State aid SA (2010/N) Slovenia Aid to compensate damages from floods in September 2010 Sir, 1. PROCEDURE (1) By electronic notification dated 24 December 2011 (SANI/5333), the Slovenian authorities notified the abovementioned disaster aid scheme. On 14 January 2011, the Slovenian authorities submitted additional information amending their initial notification (SANI/5396). The Commission requested additional information by letter dated 22 February 2011 (2011/018450), to which the Slovenian authorities replied by letter dated 18 March 2011 (2011/028441). 2. DESCRIPTION OF THE AID MEASURE 2.1. Objective of the aid scheme and geographic scope (2) The notified scheme aims to partially make good the damage caused to undertakings by the exceptionally heavy rains leading to floods which occurred from 16 to 20 September Samuel ŽBOGAR Minister za zunanje zadeve Republike Slovenije Prešernova cesta 25 SI-1001 Ljubljana 1 Commission européenne, B-1049 Bruxelles Europese Commissie, B-1049 Brussel Belgium Telephone: 32 (0)

2 (3) The geographic scope of the notified scheme (covering 170 municipalities located in the north of the Primorska region and in the regions of Gorenjska, Western Štajerska, Eastern Štajerska, Podravje, Ljubljana, Notranjska and Zasavje) was defined on the basis of the Slovenian Government Decision No /2010/3 of 18 November In making its decision the Slovenian Government considered the assessment of the direct damage to undertakings caused by the floods that occurred from 16 to 20 September 2010; this assessment was submitted by the Administration of the Republic of Slovenia for Civil Protection and Disaster Relief Legal basis (4) The legal basis of the scheme is: - the Removal of Consequences of Natural Disasters Act 1 (ZOPNN), - the Programme for making good damage caused to the enterprise sector by floods in Slovenia between 16 and 20 September (Programme A), - the Partial programme for remediation of the effects of direct damage to property as a result of the floods of 16 to 20 September (Programme B) Ascertainment of the natural disaster (5) The rainfall started on 16 September 2010 and became unusually heavy on 17 and 18 September 2010, affecting a major part of Slovenia. The highest values were measured at Črnovrška plateau near Idrija with a two-day sum of more than 500 mm. In the entire period of meteorological measurements in the territory of Slovenia, the Environment Agency has recorded locally similar heavy precipitations 4, but this time the geographical extent of the heavy rainfall was unusually large. The estimated average rainfall sum across the state amounted to mm in 48 hours, making it the most severe precipitation case in the last six decades. The record rainfall resulted in very high river discharges causing catastrophic flooding in extremely wide areas of the country, leading to huge material damage. (6) The event was qualified de jure as a natural disaster on the basis of the Slovenian Government Decision No /2010/3 of 18 November The Slovenian Government adopted this Decision pursuant to the Act on the Protection against Natural 1 Official Gazette of the Republic of Slovenia, No 75/2003, 98/2005, 90/2007, 102/2007 (in original language: Zakon o odpravi posledic naravnih nesreč - Uradni list RS, št. 114/05, uradno prečiščeno besedilo, 90/07 in 102/07). 2 Government Decision No /2010/18 of (in original language: Program odprave posledic škode v gospodarstvu po poplavah v Sloveniji med 16. in 20. septembrom sklep Vlade RS št /2010/18 z dne ). 3 Government Decision No /2010/6 of (in original language: Delni program odprave posledic neposredne škode na stvareh zaradi posledic poplav med 16. in 20. septembrom sklep Vlade RS št /2010/6 z dne ). 4 December 2009, September 2007, January 1979, September 1933, September

3 and other Disasters (ZVPNDN) 5, and the ZOPNN. The latter, in its Article 11(3), indent No 1 lays down that the state budget may be used as a source of funds for the removal of consequences of natural disaster, if the direct damage caused to property has been assessed as higher than 0.3 promille of the planned state budget revenues. In this particular event the specified limit was exceeded. (7) On 18 November 2010 the Slovenian Government accepted a final report on the level of damage caused to enterprises in the affected municipalities. In accordance with the ZVPNDN, the Decree on the Methodology for Assessing Damage 6, and the ZOPNN, the Administration of the Republic of Slovenia for Civil Protection and Disaster Relief produced, in cooperation with the Ministry of the Economy and the Ministry of the Environment and Spatial Planning, a final report on the estimated amount of damage caused. On the basis of this final report, the Slovenian Government adopted a decision establishing the amount of the damage to the enterprise sector as EUR Budget of the aid scheme (8) The overall budget of the scheme is EUR (EUR for Programme A and EUR for Programme B) Beneficiaries and sectoral scope (9) The Slovenian authorities indicated that the estimated number of beneficiaries of the notified scheme is between 101 and 500. The beneficiaries of Programme A are 127 commercial entities located in the affected municipalities and listed in a table annexed to Programme A. Programme B will only include those beneficiaries specified in Annex 2 of Programme B as being owners of damaged buildings used for carrying out commercial activities (business buildings, industrial buildings and combined business-residential buildings, the latter only for the part of the building used for commercial activities). (10) Both measures, Programme A and Programme B, will be applied to undertakings in all economic sectors, except to undertakings active in the production of agricultural products listed in Annex I of the TFEU, and to undertakings active in the fisheries and aquaculture sector, which are excluded from the present scheme Duration of the aid scheme (11) The aid measure applies only to the damages caused by the heavy rains and floods occurred between 16 and 20 September Slovenia confirmed that no aid will be granted or paid under the notified scheme before the approval of the scheme by the Commission. (12) For Programme A the beneficiaries of the notified scheme could apply for aid on the basis of the call for applications sent to all beneficiaries by the Ministry of the Economy. The deadline for beneficiaries to submit aid applications under the scheme for Programme A was 11 March Official Gazette of the Republic of Slovenia, No 51/06. 6 Official Gazette of the Republic of Slovenia, Nos 67/03, 79/04, 81/06 and 68/08. 3

4 (13) For Programme B the beneficiaries of the notified scheme may submit their applications for aid within 60 days of the receipt of the call for applications. Beneficiaries will receive a call for application no later than 31 May (14) No aid will be granted on the basis of the notified scheme after 31 December Payments under the scheme are allowed as from the date of approval by the Commission until 31 December Administration of the aid scheme (15) For Programme A the scheme is administered by the Ministry of the Economy. For Programme B the scheme is administered by the Ministry of the Environment and Spatial Planning. Various commissions have been established at municipal, regional and national level. These commissions are responsible for assessing the applications from beneficiaries, verifying the supporting documentation and determining the eligible amount of damage and the corresponding aid amount. Undertakings that have suffered damage as a result of the heavy rains and floods have to submit proof of such damage to the commissions. They must also submit copies of any insurance policies for any of the type of assets liable to compensation. The final assessment of the level of damage is adopted and confirmed by the government. Payments are made by the Ministry of Finance. False or incorrect declarations are liable to prosecution and recovery with interests Eligible expenses (16) Eligible costs under Programme A are costs related to compensating damage caused by the natural disaster to plant and equipment, stocks and unfinished goods, and damage due to loss of income. The methodology 8 used to assess the aforementioned damages is the following: Damage to plant and equipment is determined through the purchase-value method, which includes a valuation of damaged machinery and equipment before and after the disaster. The evaluation takes into consideration the shortened normal operable life of the machinery, the increased maintenance costs and the reduced market value caused by the flood. The estimated market value is considered, taking into account the effect of depreciation. Reimbursement cannot be claimed for machinery and equipment that is fully depreciated. The amount of damage reported by the beneficiary must be confirmed by a sworn Court evaluator or authorised evaluator of the Slovenian Institute of Auditors. Copies of insurance policies should also be attached and will be taken into consideration when calculating the eligible costs. Damage to stocks of materials, unfinished production, products and merchandise is determined on the basis of submitted accounting documents (delivery note, invoice, etc.) proving their existence at the time of the disaster. Damage to stocks of materials, unfinished production, products and merchandise is determined on the basis of the difference between the purchase value and the actual value following the disaster, also 7 Exceptionally these payments may be postponed after the specified period, should the claims have been filed with the court, as some beneficiaries might disagree with the level of the granted state aid; the competent courts for such disputes at the second instance are the ordinary courts of law in the Republic of Slovenia. 8 This methodology was also used as calculation method for the approved aid scheme State aid N 32/2008 Slovenia - Aid to compensate for the damage caused by the storm and floods of

5 taking into account price variations. Damage to stocks may only be claimed for goods that have been transferred to the balance sheet of the undertaking in the 24 months prior to the disaster. The amount of damage reported by the beneficiary must be confirmed by a sworn Court evaluator or authorised evaluator of the Slovenian Institute of Auditors. Copies of insurance policies should also be attached and will be taken into consideration when calculating the eligible costs. Damage due to loss of income represents the earnings which the undertaking could have realised after the disaster compared to its own performance before the disaster, if the disaster had not happened and the company had operated normally. Compensation is calculated on the basis of the average monthly value-added 9, multiplied by the number of months (up to a maximum of three months) during which the undertaking was not able to resume its business as before the disaster. The methodology used takes account of the undertakings earnings before interest and taxes (EBIT), depreciation and labour costs. (17) Eligible costs under Programme B are the costs for renovation of damaged buildings where commercial activities are carried out. The methodology used to assess the damages is based on the Decree on damage assessment methodology 10 : The Administration of the Republic of Slovenia for Civil Protection and Disaster Relief, which acts within the Ministry of Defence, is competent to estimate the damage caused to the buildings by natural disasters. The legal basis to draw up an inventory of damaged property is the Decree that also includes the initial average prices for the assessment of partial damage to buildings. On the basis of these prices the municipality/regional commission for the damage assessment may draw up an inventory of damaged parts of buildings and estimate the damage. The relevant body for the assessment of damage to buildings is a municipal/regional commission for damage assessment. This commission will assess the damage by visiting a site and surveying the damaged building. The record of inspection and assessment of damage will be approved by a regional commission for damage assessment and a state commission for damage assessment. The costs of renovation of damaged buildings will be considered eligible, if the beneficiary can prove the need for renovation and the price for renovation works by submitting the appropriate invoices and proof of work carried out. (18) The minimum amount of damage for which aid can be granted is EUR Figures are based on the income statement, the application form or other proof for the 12 months before the disaster. If the undertaking has been in operation for less than 12 months before the disaster, the average monthly value-added is calculated on the basis of figures from the income statement or the application form, or other proof for the period of operation of the undertaking. 10 Decree on the method of calculating the level of funds for remediation of the effects of natural disasters on buildings and dwellings, and of mortgage funds for the reconstruction of dwellings (Official Gazette of the Republic of Slovenia, No 36/05). This methodology was also used as calculation method for the approved aid scheme State aid N 401/2008 Slovenia - Aid to compensate for the damage caused by the storm and floods of (Ministry of the Environment and Spatial Planning). 5

6 2.9. Form of aid (19) Aid is awarded in the form of direct grants Aid intensity (20) Under Programme A, the maximum aid intensity for compensation for damages to noninsured property or loss is 50% of eligible costs (60% in case the property or loss was insured against a natural disaster of the type suffered by the beneficiary). (21) Under Programme B, the maximum aid intensity for compensation for damages to noninsured buildings is 30% of eligible costs (40% for insured buildings) Cumulation of aid (22) On 30 September 2010 the Slovenian Government charged the Ministry of Economy to set up a first intervention measure in the form of a de minimis scheme 11. Beneficiaries could already receive partial compensation for damage to plant and equipment under the de minimis rule (and in any case limited to 20% of the eligible costs). These amounts are to be considered as a prepayment of aid and are deducted from the aid amount that beneficiaries can receive under the present scheme. (23) The Slovenian authorities confirmed that account will be taken of the rules on cumulation of aid and that the overall amount of compensation received by an individual beneficiary from any public funds combined with insurance payments will not exceed 100% of the assessed damage in any circumstances Other elements of the scheme (24) The Slovenian authorities have given assurance that they will suspend the payment of any aid under the notified aid scheme to any undertaking that has benefited from earlier unlawful aid declared incompatible by a Commission Decision, until that undertaking has reimbursed or paid into a blocked account the total amount of unlawful and incompatible aid and the corresponding recovery interest. (25) The Slovenian authorities indicated that the notification does not contain any confidential information which should not be disclosed to third parties. 3. ASSESSMENT OF THE AID MEASURE 3.1. State aid character of the measure (26) The compensation is provided through State resources within the meaning of Article 107(1) TFEU. Since the compensation will be granted to a limited number of undertakings, the measure is considered to be selective and to confer an advantage which may distort or threaten to distort competition. As the scheme covers sectors and undertakings involved in trade between Member States, there is a risk that the aid could affect such trade. The proposed aid measure therefore constitutes State aid within the meaning of Article 107(1) TFEU. 11 In accordance with Commission Regulation (EC) No 1998/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to de minimis aid (OJ L 379, , p. 5). 6

7 3.2. Legality of the aid measure (27) The Slovenian authorities have fulfilled their obligation according to Article 108(3) TFEU by notifying the aid measure before putting it into effect. The Commission takes note of the fact that the scheme will enter into force only after approval by the Commission Compatibility of the aid measure (28) The Commission has examined the notified scheme pursuant to Article 107(2)(b) TFEU. This assessment has led to the following observations: Ascertainment of a natural disaster (29) Article 107(2)(b) TFEU states that aid to make good the damage caused by natural disasters or exceptional occurrences shall be compatible with the common market. The Commission has previously accepted that flooding can be qualified as a natural disaster 12. (30) Given the very high water levels of several rivers, torrents and streams in the north of the Primorska region and in the regions of Gorenjska, Western Štajerska, Eastern Štajerska, Podravje, Ljubljana, Notranjska and Zasavje, which were due to the exceptionally heavy rainfall in these areas between 16 and 20 September 2010, it is possible to qualify the resulting flooding caused by rapidly rising waters and overflows in water courses as a natural disaster Mechanism to rule out overcompensation (31) In order to be compatible with Article 107(2)(b) TFEU the aid must be proportional to the damage caused by the natural disaster and the compensation for damage to assets claimed for by the beneficiaries must be a proven direct consequence of the former. Aid must not result in overcompensation of damage; it should only make good the damage caused by the natural disaster. (32) The objective of the scheme is to bring the situation of the affected entities to the situation as from before the disaster. The compensation is based on the renovation or replacement cost of the affected property and not on the up-graded value. (33) To avoid any misuses in the amounts paid to beneficiaries and to guarantee that the aid is only paid out to beneficiaries who effectively repair the damages incurred, the aid applications are verified at several levels by competent and/or specially appointed bodies and need to be accompanied by the relevant evidence. False or incorrect declarations are liable to prosecution and recovery with interests. (34) Aid under the present scheme and compensation from other sources, including insurance payments, may not exceed the value of the damage to the individual beneficiary. Overcompensation is therefore ruled out. 12 See for example: State aid N 32/2008 Slovenia - Aid to compensate for the damage caused by the storm and floods of ; State aid N 401/2008 Slovenia - Aid to compensate for the damage caused by the storm and floods of (Ministry of the Environment and Spatial Planning); State aid N 235a/2010 Poland - Aid scheme for compensation of damage caused in Poland by the floods of May and June 2010 (outside the field of Annex I of the EC Treaty); State aid N 326/2010 Poland - Aid scheme to compensate enterprises for damages caused by the floods of 2010 in Poland. 7

8 (35) With regard to activities connected to the processing and marketing of agricultural products, the Commission notes that the relevant provisions (paragraph 123) of the Community guidelines for State aid in the agriculture and forestry sector 2007 to are met, since the existence of a natural disaster and the link between the damage and the aid has been established (see paragraphs 5 to 7 and 16 above), support is provided so as not to exceed 100% of damage, after taking into account the amounts received under insurance policies (see paragraph 23 above), and compensation is set at the individual level after an assessment based on objective parameters (see paragraphs 16 and 33 above). (36) In view of the above, the Commission considers that the notified aid scheme is compatible with the internal market in accordance with Article 107(2)(b) TFEU. 4. DECISION (37) The Commission has accordingly decided to consider the notified aid scheme compatible with the TFEU. (38) The Commission reminds the Slovenian authorities that all plans to modify this scheme have to be notified to the Commission. (39) The Commission notes that the Slovenian authorities have confirmed that the notification does not contain confidential information. Yours faithfully, For the Commission Joaquín ALMUNIA Vice President of the Commission 13 OJ C 319, , p. 1. 8