Brussels, 20 November 2013
State aid: Commission authorises €448 million aid for construction of Lithuanian LNG terminal
The European Commission has found that aid for the construction and operation of a Liquefied Natural Gas terminal, to be developed in the Klaipėda Seaport in Lithuania by AB “Klaipėdos nafta”, complies with EU state aid rules. The project aims at increasing the security of gas supply within Lithuania by diversifying its supply sources. The Commission has concluded that the aid furthers EU energy goals without unduly distorting competition as the development of the LNG terminal will integrate Lithuania into the EU gas market and will stimulate competition on the Lithuanian gas markets.
Commission Vice-President in charge of competition policy Joaquín Almunia stressed: "The aid will reduce Lithuania's dependence on a single source of gas supplies and enhance its security of supply. By diversifying the gas supply sources, the terminal will also stimulate competition between gas suppliers, which in turn will benefit consumers."
In 2013, Lithuania notified plans to support the construction of the Klaipeda LNG terminal with state guarantees backing up the loans needed to finance the up-front investment costs of the terminal. In addition, the operator will receive the so-called “LNG Supplement”, a fee imposed on all users of the transmission system that will be collected by the Lithuanian transmission system operator and paid out to the operator of the terminal after authorisation of the Lithuanian energy regulator, in order to cover part of the investments costs and its maintenance costs during the lifetime of operation of the terminal.
The operator will be obliged to provide regasification services to any third party on regulated tariffs and under non-discriminatory conditions.
In present value terms, the various public support elements for the construction of the LNG Terminal amount to about €448 million.
The Commission's investigation has found that the investment contributes to the security of supply and that the aid is necessary and proportionate to realise the investment. Moreover, the terminal will be open to third parties on non-discriminatory terms, ensuring that there are no undue distortions of competition.
As to the compensation for maintenance costs, it will amount to a yearly average of €17 million.
The Commission has found that this compensation for maintenance costs is in line with the EU Framework on services of general economic interest (SGEI, see IP/11/1571 and MEMO/11/929). In particular, the objective criteria for defining eligible costs, the monitoring of the implementation by the Lithuanian energy regulator and the regulated return on investment will ensure that the operator of the terminal will not be overcompensated for discharging the public service entrusted to it.
Article 107 (3) c) of the Treaty on the Functioning of the European Union (TFEU) allows Member States to grant aid for the development of certain economic activities.
Given current gas interconnections, Lithuania, as the other Baltic States – is isolated from the rest of the European gas transmission network and is entirely dependent on Gazprom as its single source of supply. It has one of the highest natural gas prices in the EU. The LNG terminal will enable Lithuania to ensure its security of supply in the short term. Moreover, in the event of a disruption of the single largest gas infrastructure, the terminal will ensue by December 2014 that the remaining infrastructure is able to satisfy natural gas demand. While other projects are planned to increase the security of supply of the Baltic States in general (gas interconnector between Poland and Lithuania, Baltic regional LNG terminal), those projects will not materialise before several years. Lithuania will continue cooperating with the other Member States on the completion of those projects.
The non-confidential versions of the decisions will be made available under the case numbers SA.36740 in the State Aid Register on the DG competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News