Government Decision no. 718 from 14 July 2008 approving horizontal state aid scheme for regional sustainable development and reduction of emissions

Objective: achieving social and economic cohesion between Romania and the European Union and improving inhabitants’ quality of life by promoting sustainable development and investments in the regions of Romania.

Sectorial coverage:

Financial support granted to economic operators on the basis of the present scheme is related to initial investments in all industrial fields and in the energy field, regarding activities such as:

• consumption,
• production of electric and thermal energy.

Geographic coverage:

The entire Romanian territory is eligible for regional state aid.

Field of application:

The present state aid scheme addresses economic operators implementing initial investments in any of the 8 regions of development in Romania, activating in all industrial fields and in the field of electric and thermal energy production.

Excepted fields and objectives:

The following sectors will NOT receive financial aid under the present scheme:

• fishery and aquaculture;
• shipbuilding sector;
• coal industry;
• steel industry;
• synthetic fibers;
• primary production of the agricultural products in annex 1 to the Treaty establishing the European Community;
• processing and marketing of agricultural products, including imitation and substitute milks, or milk products.
   

The following objectives are NOT eligible for aid under the present scheme:

• financial support for export-related activities towards third countries or Member States - aid directly linked to the quantities exported, to the establishment and operation of a distribution network or to other current expenditure linked to the export activity;
• preferential use of domestic products to the detriment of imported ones;
  purchase of transport equipments in transport sector.

Scheme management unit and state aid provider - The Ministry of Economy and Finance, through the General Direction - Energy Policy
 

Beneficiaries:

Potential beneficiaries can be large companies, SMEs, including micro-enterprises.

Beneficiaries can submit projects individually.

Eligibility criteria:

         I. Beneficiaries:

1. are registered as trading companies in Romania, as provided in the national legislation in force;
2. their activities are carried on in any industrial field or in the field of electric and thermal energy production, except for the excluded fields;
3. have no unpaid taxes or contributions (including redeductions) to the state budget, the social insurance budget or special and local budgets, as provided in the national legislation in force;
4. are not firms in difficulty as defined by the European guidelines on state aid for rescuing and restructuring firms in difficulty;
5. have no restrictions regarding trading activities, as provided by law;
6. make proof of possessing the financial resources necessary for implementing the project;
7. have the human resources necessary to implement the project;
8. have the capacity (human and financial resources) necessary to ensure the operation and maintenance of infrastructure after project implementation;
9. in case the beneficiary is/was subject to a state aid recouping decision following a decision of the Competition Council or of the European Council that remained definite and irrevocable, the illegal and/or abusively used aid must be entirely recouped;
10. prove the necessity of the project being financed through state aid. The entity in charge of evaluating the financing necessity of the project is the scheme management authority;
11. meet other conditions specified within the request for project proposals and Applicant Guidelines, not infringing state aid provisions in force. 

         II. Projects:

1. only initial investment projects are considered eligible for financing under the present scheme;
2. projects representing in fact simple investments in replacing or rehabilitating already existing installations, equipments and outfits are not to be considered eligible;

3. one of the following objectives must be achieved as a result of project implementation:
3.1. a minimum energy saving, complying with the regulated energy balance sheet, as specified in the request for project proposals;
3.2. SO2, NO(x) and dust emissions will not exceed the value-ceiling provided by the legislation in force.
4. the project is implemented in Romania;
5. the project must have one of the following objectives:
5.1. improving energetic efficiency of industrial operators by investing in equipments and installations necessary to achieve a minimum energy saving according to an energy balance sheet; 
5.2. investment in desulphurizing installations, installations for reducing the nitrogen oxides produced by combustion gases and filters for large combustion installations with transition period, in a retechnologized/modernized group, able to function for at least 15 years or 100 000 hours from the moment the project was finalized.
6. the project has received all necessary authorizations / endorsements / approvals for its implementation, as specified in the request for project proposals;
7. the project complies with EU- and national regulations on environmental protection, public procurement and informing and publicity activities;
8. the project ensures the material, financial and human resources necessary for investment implementation, operation and maintenance during 5 years after inauguration, for large companies and 3 years, for SMEs.  Required parameters specified within the feasibility study and agreed on in the financing agreement must be complied with;
9. project activities are not currently, nor have ever been financed from other public funds, excepting the case of preliminary studies (pre-feasibility study,  geo-topographic analysis, feasibility study, technical project/execution details, etc);
10.  no project works have been started;
11. the project complies with other conditions specified within the    request for project proposals and Applicant Guidelines, not infringing state aid provisions in force. 

Duration – the scheme will apply until 31st of December 2013.

Scheme budget:

Total estimated budget is EUR 318 800 000, deducted by year as follows:

Measures of support addressing enterprises implementing initial investments consist in them being awarded grants.

Money will be allocated in installments, according to the provisions of the Applicant Guidelines and their value updated at the aid awarding moment.

State aid intensity can not exceed:

• 40%  from the total eligible expenditure, for Bucuresti-Ilfov region;
• 50% from the total eligible expenditure, for the other seven development regions;
• these two intensity levels will increase by 20%, in the case of small sized enterprises (including micro-enterprises) and 10%, in the case of medium sized enterprises.

The difference up to the total value of the project falls under the responsibility of the aid beneficiary, whose financial contribution must cover at least 30 % from the eligible expenditure. This amount may come from either personal or attracted sources, under a form that is not subject to any public aid.

Public aid examples:

• loans granted under preferential conditions;
• interest bonifications;
• capital participation of public institutions not complying with the market economy investor principle;
• public guarantees containing state aid elements;
• “de minimis” aids.
   

The present state aid scheme does not apply to big investment projects with eligible expenditure exceeding EUR 50 million.

Eligible expenditure:

The following categories of initial investment expenses are considered eligible:

• costs for investments in tangible assets – considered as a whole,  for both large companies and SMEs;
• costs for investments in intangible assets.

The cost to be considered is:

• the overall investment cost, in the case of SMEs;
• a ceiling of maximum 50% from the total eligible expenditure of the project, in the case of large companies.

Investments in tangible assets regard exclusively constructions, equipments, installations and outfits.

The purchased assets must be new.

Lease expenses can not be taken for eligible costs related to the acquisition of tangible and intangible assets.

The following conditions are to be met for intangible assets to be included in the initial investment:

• assets must be used exclusively in the location for which the regional state aid was awarded;
• assets must be considered depreciable;
• assets must have been purchased from a third party, complying with market regulations;
• assets must be firm-owned and kept in the locations receiving regional state aid for at least 5 years in the case of large companies and 3 years in the case of SMEs.

Regional state aid is awarded by means of the present scheme only if:

• the beneficiary had submitted an application for being awarded the aid  before project works started;
• the authority responsible with the scheme management confirms subsequently in writing that, under the condition of a more detailed investigation, conditions set up in the scheme had in principle been complied with before project works started; 

The investment implemented with financial support granted by means of the present state aid scheme must be kept in the region that received the state aid:

• for 5 years from the date workings ended, in the case of large companies;
• for 3 years, in the case of SMEs.

Scheme implementation and development procedures:

• initiating the request for project proposals;
• receiving and registering the financing application;
• checking the administrative conformity of the financing application and the existence of necessary accompanying documentation - eliminatory: only draft projects passing this stage are admissible to the next;
• checking the eligibility of draft projects and beneficiaries –eliminatory: only drafts passing this stage are admissible to the next;
• sending the agreement in principle on meeting the eligibility criteria (art.31 alin.1) to the beneficiary;
• making the technical and financial evaluation of the projects;
• selecting the projects;
• drafting and concluding the financing agreement;
• project development and expenses reimbursement: payment is made by the Payment Unit of the Sectorial Operational Programme “Increase of Economic Competitiveness” only on submission of justificatory documentation, after the approval of the reimbursement application;

Justificatory documents:

      - statutory certificate, in original, issued by the Trade Register Office affiliated to the Court under the jurisdiction of which the applicant company has its headquarters; the following information is mentioned in the statutory certificate: identification data, unique registration code, associates and legal representatives of the company, main field of activity and all secondary activity fields, company’s lucrative facilities and the date of the last mention in the register together with its object; 
      - statement on the enterprise being an SME, in the case of SMEs; 
      - approved financial situations according to the last accounting period – submitted  in copy; 
      - the investment plan financing is applied for; 
      - technical – economic study elaborated by a specialized company, certifying the viability of the project applying for financing; 
      - tax registration certificate statuting that financial obligations towards the general consolidated budget had been paid, issued according to the law (for lucrative facilities inclusively) and submitted in original or legal copy; 
      - tax registration certificate regarding the fulfillment of payment obligations towards the local budget, issued according to the law for lucrative facilities inclusively and submitted in original or legal copy; 
      - affidavit on behalf of the legal representative of the enterprise that the company is not subject to compulsory execution, insolvency, juridical reorganization, bankruptcy, operational closing, dissolution, liquidation or special administration; that the company does not have suspended activities or other similar situations regulated by law;
      - affidavit on behalf of the legal representative of the enterprise that there had been no state aid recouping decisions issued against the company or, in case there had been are, these decisions were executed according to the law in force; 
      - affidavit on behalf of the legal representative of the enterprise that the company has not been and will not be granted state aid on the basis of other regional schemes from other state aid providers for the same eligible costs of the initial investment for which it applied for state aid on the basis of the present scheme; an affidavit regarding the “de minimis” aid applied for/granted for the same eligible costs is also required; 
      - mandate signed and stamped by the legal representative of the applicant enterprise, in case other person than himself signes the application for the financing agreement-in-principle; 
      - copy of the identity card of the person empowered to sign the application for the financing agreement-in-principle; 
      - inventory of the documents submitted for obtaining the financing agreement-in-principle.

• monitoring projects development;
• finalizing projects: the final payment is made on the basis of documentation previously submitted, following the provisions of the financing agreement;
• post-implementation monitoring the projects over a 5 year-period for large companies and 3 year-period for SMEs;
• the economic operator will submit to the Romanian Ministry of Economy and Finance (MEF) a financing application addressed to the Intermediary Organism for Energy;  the application must be accompanied by the necessary documentation specified in the request for project proposals and Applicant Guidelines; 
• the date for starting the submission of financing applications and documentation in proof to the Ministry of Economy and Finance will be announced the moment the draft projects request is initiated, on MEF official website: Intermediary Organism for Energy -    http://oie.minind.ro