The national air carrier TAROM has been cleared by the Competition Council for the receipt of 600 million euros of state aid required by its restructuring process. Ziarul Financiar received the news from Mihai Berinde, chairman of the Competition Council. The total volume of state aid either cleared or pending approval stands at approximately 1.8bn euros his year, about one billion euros of which should go to the steel industry.
The TAROM airline has been ailing for a number of years now, during which it kept on posting losses. Although restructuring studies have been devised, with one such study even being drawn up by Lufthansa Consulting (part of Germany’s Lufthansa aviation company), the goals announced every year were never subsequently realised. In 2003, the company logged $14.5 million losses against a turnover of $220 million. Losses should shrink to $6 million this year. TAROM’s officials estimate the company should eventually step into the black in 2005. The company has seen no less than ten people replaced as its chief executive in the last decade, which has definitely affected its development.
TAROM representatives had not provided details on the restructuring plan, for which this hefty slice of state aid had been granted, by the time of going to print.
“The state aid will not stop, but it will be granted in line with the strict rules of the acquis communautaire, in order to make the respective companies viable and help them into profit. State aids may be granted for research and development, employment, work force training or regional development, but not for filling holes in the economy,” Berinde says.
Mihai Berinde, 54, was appointed chairman of the Competition Council this spring – one of the most influential positions in Romania. As soon as Romania joins the EU, the Competition head will only report to the European Commissioner for Competition. Mihai Berinde was previously a high-ranking official in the central administration, with his last position being state secretary for European integration with the Ministry of Economy and Trade.
The Competition Council does not grant state aid; it grants or denies applications for state aid, observing the criteria in line with the European legislation.
Companies in the steel industry have 688 million euros in state aid under evaluation by the Competition Council, while the Economy and Trade Ministry requested 400 million euros in aid, 71% of which was allocated to big investment projects.
“The state-aid requested for the steel industry amounts to about one billion euros until 2005, but actual aid only stands at 400 million euros. The rest is either cancelled debts or other incentives that do not concern the future of the companies in this sector,” Mihai Berinde specified.
The distribution of the above-mentioned state aid by destination is as follows: 70% will go to restructuring, 17% to investment projects and 7% for regional development etc.
adrian.mirsanu@zf.ro