WRITTEN QUESTION P-3382/98

by Sérgio Ribeiro (GUE/NGL) to the Commission

(9 November 1998)

Subject: Portuguese steel industry service company SNES: possible cessation of operations under an agreement between the Portuguese Government and the European Union

According to documentary evidence, the Portuguese State, represented by the Government, and the European Union have apparently agreed to wind up the operations of the steel industry service company SNES (Siderurgia Nacional - Empresa de Serviços, S.A.).

As a result of the agreement, if it exists, the company is said to have commissioned private consultancy firms to carry out conversion studies on the industrial area now used for steel production. The firms are exploring various avenues.

Bearing in mind especially that, even after completing a dubious privatisation and "slimming-down" exercise, the company still accounts for over a thousand jobs and occupies an important place in the Portuguese industrial fabric and the region where its premises - extending over more than 200 hectares - are situated, the agreement, if implemented, would raise a number of uncertainties and anxieties.

Given that the role which the Community authorities appear to have played has worrying implications, not least where the reaction of the public is concerned, can the Commission therefore say whether an agreement to the above effect has in fact been concluded? If agreement has been reached, of what strategy does it form part, what purposes is it intended to serve, and to what conditions has it been made subject?

Answer given by Mr Van Miert on behalf of the Commission

(3 December 1998)

At the time when Siderurgia Nacional's restructuring plan was notified, the Community's steel industry was experiencing a difficult period. There was a general slowdown in the economy and a serious imbalance between supply and demand, accompanied by a collapse in prices. In taking the relevant decisions, the Commission took account of the serious situation facing the industry, and of the fact that Siderurgia Nacional is the only Portuguese steel producer of significant industrial weight.

Pursuant to Article 95 of the ECSC Treaty, the Commission authorised Portugal to grant aid to the public undertaking Siderurgia Nacional (Commission Decision 94/257/ECSC of 12 April 1994 concerning aid to be granted by Portugal to the steel company Siderurgia Nacional(1)), in the form of an injection of capital totalling PTE 38 000 million and debt write-offs totalling PTE 22 120 million. The aid was paid in 1994 and 1995. In September 1994 the Commission approved(2), pursuant to the Fifth Steel Aid Code, PTE 4 925 million in social aid and PTE 1 000 million in environmental aid.

In March 1994, the former Siderurgia Nacional was converted into a holding company, SN SGPS, with three production companies, SN Planos (flat products), SN Longos (long products) and SN Serviços (services). SN Planos and SN Longos were privatised. SN SGPS was put into liquidation. One of the main elements of the restructuring effort is the replacement of the blast furnace at SN Serviços by an electric arc furnace at SN Longos. The installation of the electric arc furnace is vital if the privatised company is to be viable. Once the blast furnace is shut down, the intention is to sell the land and equipment and put SN Serviços into liquidation. A number of measures have been taken to accompany the closure of SN Serviços, including a scheme for mutually agreed departures, incentives and specific support for workers who wish to set up their own businesses, and training in certain fields such as car mechanics, catering and construction, so as to promote alternative employment. In addition, an office has been set up to assist employees in finding new jobs.

The delay in installing the new electric arc furnace at SN Longos has held up the closure of the blast furnace at SN Serviços. That is why the Commission has decided to continue monitoring the situation until 2000. The Commission receives a detailed report twice a year on the restructuring of the former Siderurgia Nacional. The report(3) is submitted twice a year to the Council.

(1) OJ L 112, 3.5.1994.

(2) OJ C 390, 31.12.1994.

(3) SEC(98) 672 final.