Specifics of providing new state aid to coal-mining enterprises
The provision of new state aid to coalmining enterprises approved by the Government in early February 2018 can be find unlawful.
This conclusion can be reached by getting acquainted the Procedure for using the funds provided in the state budget for measures to develop of domestic coal products production and further reform the state sector of the coal industry, approved by the resolution of the Cabinet of Ministers of Ukraine on 02.07.2018 No. 63.
This Government Resolution has regulated the use of budget funds provided in the state budget under the program “Implementation measures to develop of domestic coal products production and further reform the state sector of the coal industry”. The budget foresees 1.3 billion UAH for this program.
These funds planned to be direct on:
– salaries (including wage arrears);
– technical upgrading and modernization of coal-mining enterprises (including investment projects financing).
According to the Law of Ukraine “On State Aid to Undertakings”, new state aid may be grant only after obtaining the relevant AMCU positive decision.
However according to the EU rules on state aid for the coal industry, which Ukraine should implement (by joining the Treaty establishing the Energy Community and signing the Association Agreement between Ukraine and the EU), only state aid to facilitate the closure of uncompetitive coal mines, as well as aid to research, development and innovation, environmental protection and training activities in the coal industry can be compatible.
At t the same time, currently there are no criteria in Ukraine for assessing the compatibility of state aid in coal mining sector.
In these circumstances, the Antimonopoly Committee of Ukraine can find state aid to the coal mining industry incompatible or unlawful, and then it will be subject to full recovery to the state budget. At the same time, the EU and the Energy Community will closely monitor the implementation of such a decision, which, unlike the antimonopoly agency, have sufficient levers of influence on the Ukrainian Government.
In this case, the execution of the decision of the Antimonopoly Committee will be the subject of closely monitoring by the EU and the Energy Community, which, unlike the AMCU have sufficient levers of influence on the Ukrainian Government.
Now, the Ministry of Finance, the Ministry of Energy and Coal Industry and the Antimonopoly Committee of Ukraine are jointly looking for a way out of the situation, but it is still difficult to predict what decision they will take.