2002/936/EC: Commission Decision of 19 June 2002 on State aid which Spain is planning to grant to BBE and BBG for the construction of a power and heat supply station (Bahía de Bizcaia Electricidad - BBE) and a regasification plant (Bahía de Bizcaia Gas - BBG) in the port of Bilbao (notified under document number C(2002) 2146) (Text with EEA relevance)
Date: 2002-06-19
Institutions: European Commission
Subjects: Spain, State aid, building subsidy, control of State aid, natural gas, power plant

L 329/10

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Official Journal of the European Communities

5.12.2002

COMMISSION DECISION

of 19 June 2002

on State aid which Spain is planning to grant to BBE and BBG for the construction of a power
and heat supply station (Bah(cid:237)a de Bizcaia Electricidad (cid:150) BBE) and a regasification plant (Bah(cid:237)a de
Bizcaia Gas (cid:150) BBG) in the port of Bilbao

(notified under document number C(2002) 2146)

(Only the Spanish text is authentic)

(Text with EEA relevance)

(2002/936/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community, and in particular the first subparagraph of Article
88(2) thereof,

Having called on interested parties to submit their comments
to the said Article (1) and having regard to their
pursuant
comments,

Whereas:

1. PROCEDURE

(1)

(2)

(3)

aid for

By letter dated 26 January 2001, registered on 29
January 2001,
the Spanish Permanent Representation
notified, pursuant to Article 88(3) of the Treaty and in
framework on
accordance with the multisectoral
(the
regional
multisectoral
the
proposed aid for the construction of a combined cycle
thermal power station and a regasification plant
in
Bilbao. By letter dated 30 March 2001, registered on 4
information to the
April 2001, Spain sent additional
Commission.

investment projects (2)
framework),

large
framework

the

or

By letter dated 6 June 2001, the Commission informed
Spain of its decision to initiate the procedure laid down
in Article 88(2) of the Treaty in respect of the proposed
aid.

The Commission Decision to initiate the procedure was
published in the Official
the European
Communities (3). The Commission invited interested
parties to submit their comments on the aid.

Journal

of

(1) OJ C 231, 17.8.2001, p. 2.
(2) OJ C 107, 7.4.1998, p. 7.
(3) See footnote 1.

(4)

(5)

(6)

(7)

(8)

By letter dated 14 September 2001, registered on the
same day, BBE and BBG sent their comments to the
Commission.

By letter dated 25 October 2001, registered on 30
their
October 2001,
comments to the Commission.

the Spanish authorities

sent

By letter dated 19 December 2001, the Commission
asked the Spanish authorities for additional information.
This was
sent by letter dated 1 February 2002,
registered on 4 February 2002.

2. DETAILED DESCRIPTION OF THE AID

the proposal

The notification covers two projects: a combined cycle
thermal power station (Bah(cid:237)a de Bizcaia Electricidad),
and a regasification plant (Bah(cid:237)a de Bizcaia Gas). The
two facilities will be built near the port of Bilbao
(Basque Country, Spain). The authority granting the aid
is the Basque Government (an autonomous authority).
According to the information provided by the Spanish
authorities,
is not part of any current
regional aid scheme authorised by the Commission.
Furthermore, it should be pointed out that the Bizcaia
Provincial Council
(Diputaci(cid:243)n Foral de Bizcaia) was
intending to grant a tax credit of 45 % of the basis of
assessment, amounting to ESP 54 149 million (EUR
for the BBE project and ESP 43 486
325 442 040)
the BBG project.
million (EUR 261 360 000)
However,
the
informed
Commission, by letter dated 23 May 2000, registered on
24 May 2000, that both undertakings had refused the
said tax concessions.

for
authorities

Spanish

the

for

the projects

recipient undertakings

are,
The
the recently formed companies BBE and
respectively,
BBG, of whose capital BP-Amoco, Repsol, Iberdrola and
EVE (Ente Vasco de la Energ(cid:237)a, a public sector undertaking
owned by the Basque Government) each hold 25 %. All
the shareholders in the new firms can be considered to
be large firms.

5.12.2002

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Official Journal of the European Communities

L 329/11

A. Combined cycle thermal power station (BBE)

B. Regasification plant (BBG)

(9)

This investment is for the construction of a combined
cycle thermal power station of 800 MW, which will use
as fuel natural gas supplied by BBG (see recitals 15 to
21), and will produce electricity for the Spanish market
(pool).

(15)

(10)

The investment project will begin in September 2000.
The station should be operational in March 2003.

This investment involves the construction of a liquefied
natural gas (LNG) regasification plant. The plant will
take delivery of, store and vaporise the LNG.
It will
produce a total of some 3 000 million Nm3 of natural
gas per year, or 9,6 million Nm3 per day. Around 40 %
of output is earmarked for the BBE power station. The
LNG is to be imported mainly from Trinidad and
Tobago and Nigeria and shipped to the plant by two
methane carriers which will make the journey regularly.

(11)

The total investment will be EUR 300 035 000 over the
period 2000(cid:151)2003, which represents a total of EUR
282 547 000 discounted to 31 December 2000 (4).

(16)

The investment project began in September 2000. The
plant
into operation in June
2003.

is scheduled to be put

(12) According to the Spanish authorities,

and three

engineering posts

the investment
will create 33 direct jobs, broken down as follows: two
managerial posts (one plant manager and one secretary),
16 operational posts (one manager of operations, five
supervisors and ten operatives), 12 maintenance posts
(one maintenance manager, nine skilled workers and
two operatives)
(one
engineering manager and two technicians). There will be
a further 13 direct jobs common to both the BBE and
BBG projects and assigned on a 50:50 basis between
them: two managerial posts (one general manager and
one
(one
administrative manager and four administrative staff)
and six general engineering posts
(one engineering
manager and five technicians). The total number of
direct jobs which the Spanish authorities expect to be
created is therefore 39,5 (33 + 6,5).

administrative

secretary),

posts

five

(17)

The investment will cost a total of EUR 232 116 000
total of EUR
over
217 392 000 discounted to 31 December 2000 (5).

the period 2000-2003, or

a

(18) According to the Spanish authorities,

the investment
will create 33 direct jobs, broken down as follows: two
managerial posts (one plant manager and one secretary),
16 operational posts (one manager of operations, five
supervisors and ten operatives), 12 maintenance posts
(one maintenance manager, nine skilled workers and
two operatives)
(one
engineering manager and two technicians). In addition,
the jobs common to both the BBE and BBG
half
projects and assigned to the BBG project must also be
counted (see recital 12). The total number of direct jobs
which the Spanish authorities expect to be created is
therefore 39,5 (33 + 6,5).

engineering posts

and three

(13)

(14)

The Spanish authorities also anticipate the creation of
23,2 indirect
jobs, broken down as follows: security
(9,7), cleaning (2,0), unskilled workers (2,0), warranty
(0,2),
on main
engineering work
maintenance of main components
(0,7), operational
maintenance (subcontractors) (2,6), canteen and services
(4,0) and administration (2). This calculation is based on
an estimated average of 1 800 working hours per year.

components

grant

nominal

a
in several

The aid to the BBE project is to take the form of a
EUR
totalling
non-repayable
instalments
30 004 000 gross, payable
between 2000 and 2003. Payment
is conditional on
completion of the investment, after inspection by the
Basque Government. The total amount of aid discounted
to 31 December 2000 works out at EUR 28 255 000,
giving an aid intensity of 7,49 % gge and 7,57 % nge.

(19)

(20)

jobs, broken down as
port
services
insulation (1),
civil
(2),

The Spanish authorities also anticipate the creation of
follows: gas
84,05 indirect
(5,6), mechanical
transport
(50),
instrumentation (1),
maintenance (3),
electrical maintenance
engineering (0,75),
painting (2), analysis of plant components (1), security
(9,7), cleaning (2,0), unskilled workers (2) and canteen
and services
(4). This calculation is based on an
estimated average of 1 800 working hours per year.

The aid to the BBG project is to take the form of a
EUR
non-repayable
totalling
23 212 000 gross, payable
instalments
between 2000 and 2003. Payment is conditional on
completion of the investment, after inspection by the

a
in several

nominal

grant

(4) In the text below, reference and discount rate: 5,7 %; tax rate:

(5) In the text below, reference and discount rate: 5,7 %; tax rate:

32,5 %. Straight-line depreciation over a period of 20 years.

32,5 %. Straight-line depreciation over a period of 20 years.

L 329/12

EN

Official Journal of the European Communities

5.12.2002

Basque Government. This gives a total amount of aid
discounted to 31 December 2000 of EUR 21 740 000,
giving an aid intensity of 9,53 % gge and 7,61 % nge.

(21)

For a more detailed description of
please consult the decision to initiate the procedure.

the two projects,

submitted

to those of

from BBE/BBG are identical
the Spanish
authorities which are examined below, although they
were
latter. Consequently,
reference will be made below solely to the comments of
the Spanish authorities although it is understood that
such references also apply to the comments made by
BBE/BBG.

before

the

3. REASONS FOR INITIATING THE PROCEDURE

5. COMMENTS FROM SPAIN

(22)

In its decision to initiate the procedure, the Commission
expressed doubts over various aspects of the aid project:

Regarding the justification of the project from a regional point
of view.

(a)

justification for the project from the standpoint of
regional development, given that the aid in question
is ad hoc aid;

(25)

is of
The Spanish authorities feel
strategic importance with regard to the energy policy of
the Basque Country,
it will help guarantee
since
electricity and natural gas supplies to the region.

this project

that

(relevant
the electricity market
(b) the situation of
product market)
in Spain (relevant geographic
market) for the BBE project, and specifically whether
or not it is in decline;

(c)

the justification of certain eligible costs, and in
intangible assets as
particular the classification of
eligible
for
justification
and
expenditure
including certain costs under the heading (cid:145)buildings(cid:146);

the

In particular,

(d) the justification for certain jobs presented by the
Spanish authorities as indirect jobs created by the
the Spanish authorities are
project.
requested to explain or justify certain jobs which
appear in both projects (security, cleaning, canteen
and services), 50 indirect jobs for the transport of
gas (BBG) and two indirect jobs in administration
(BBE).

(23)

Should the Commission’s doubts prove well-founded,
the maximum intensities allowed by the multisectoral
framework (6)
to be
reviewed.

these projects will have

for

4. COMMENTS FROM INTERESTED PARTIES

(24)

BBE and BBG, the beneficiaries of the aid, have jointly
submitted comments to the Commission. The comments

(6) The maximum allowable intensity for a large investment project
under the multisectoral framework is calculated according to the
formula set out in point 3,10 of the framework. It is obtained by
multiplying the regional ceiling (R) by the coefficients resulting
from the competition factor (T), the capital-labour factor (I) and the
regional impact factor (M) (R (cid:215) T (cid:215) I (cid:215) M, where the result may not
exceed R).

(26) As

regards electricity,

the Spanish authorities have
indicated that
the electricity produced in the region
satisfies only 20 % of demand. The project will also help
to reduce the cost of transport of electricity and gas and
the loss of energy en route.

(27) With regard to gas, the Spanish authorities emphasise
that the Basque Country is far from the main entry
points for gas, even though practically all
the gas
consumed in the Basque Country is imported. They also
the demand forecasts for gas in the
point out
Basque Country show a constant increase.

that

(28)

(29)

the

feel

that

impact of

two projects

regasification plant

the Spanish authorities

the
Furthermore,
regional
should be
considered jointly, as they are so closely linked, in that
the electricity plant would not have been built without
In this
the
the
connection,
the gas
electricity plant will consume only 40 % of
the
production of
remaining 60 % is destined for the market,
thereby
helping to improve the supply of gas to the Basque
Country.

the Spanish authorities indicate that

regasification plant, while

versa.

vice

and

the

the

University

of Deusto

The Spanish authorities have submitted a study on the
effect of the project on GNP and employment in the
region. According to this study, which was carried out
(University-firm
by
collaboration (cid:151) Deiker),
these
projects to the GNP of the region would be 0,188 %
(BBE) and 0,202 % (BBG), and the projects would help
create 39,5 direct jobs, 23,2 indirect jobs and 452,6
spin-off jobs (BBE), and 39,5 direct jobs, 34,05 indirect
jobs and 552 spin-off jobs (BBG), i.e., 515,3 jobs from
the BBE project and 625,55 jobs from the BBG project.

the contribution of

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Official Journal of the European Communities

L 329/13

(30)

Finally, the Spanish authorities allude to the construction, as part of this project, of two liquid
natural gas transport ships, each at a cost of EUR 210 350 000, which would create 1 000 jobs for
one year.

Regarding the situation of the electricity market in Spain

(31)

The Spanish authorities do not share the Commission’s view that the electricity market in Spain is
in decline. The data on consumption in the period 1995-2000 shows that the market turnover is
positive, as illustrated by the table below:

Apparent consumption (*)

Year

Production (GWh)

Imports (GWh)

Exports (GWh)

Consumption (GWw)

Variation (%)

1995

1996

1997

1998

1999

2000

169 094

176 510

189 381

196 046

208 258

223 944

7 633

6 750

4 597

8 694

11 951

12 265

3 147

5 691

7 670

5 562

6 233

7 833

173 581

177 569

186 308

199 448

213 976

228 376

(cid:151)

2,3

4,9

7,1

7,3

6,7

(*) Source: Spanish Electric Industry Association, UNESA. The differences between apparent consumption and net national

consumption are due to self-supply, pumping and losses in transport and distribution.

(32)

Furthermore, according to the provisional data in the 2001 Red ElØctrica de Espaæa (Spanish
electricity grid) report, there was a 5,4 % increase in demand in 2001 (first 10 months) by
comparison with the previous year.

(33) As regards the evolution of the market in terms of value, the available data also shows, according
to the Spanish authorities, that the electricity market is not in decline, as illustrated by the table
below:

Value of electricity sold (million ESP) (*)

Year

Basic

Discount

Total

Variation ( %)

1995

1996

1997

1998

1999

2000

(*) Source: UNESA.

2 198 876

2 225 438

2 262 476

2 178 514

2 161 676

2 249 889

87 671

88 314

82 414

71 577

60 356

58 592

2 111 259

2 170 124

2 180 062

2 106 937

2 101 323

2 191 297

(cid:151)

2,8

0,5

ﬂ3,3

ﬂ0,27

4,28

(34)

The Spanish authorities emphasise in this regard that the decrease in 1997, 1998 and 1999 was
due more to the dropping of prices set by the government following the progressive opening up of
the electricity market than to a drop in demand.

L 329/14

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Official Journal of the European Communities

5.12.2002

(35)

(36)

Furthermore, the Spanish authorities point out that the project will be profitable because of the
reasonable price forecasts and the situation of the electricity market. The firms calculate that at a
rate of EUR 0,03/Kwh, the project could produce an internal rate of return of between 8,5 % and
10,5 %. They also point to the existence of several similar projects in Spain, undertaken by Spanish
and foreign firms.

The Spanish authorities also point out that the Spanish electricity market is far from a situation of
excess capacity. On the contrary, they estimate that in the absence of new investment, the current
generation capability may not be sufficient to satisfy growing demand. Current demand is only
being met because coal plants have been brought into service, since hydroelectric plants are too
climate-dependent. The Spanish authorities consequently emphasise the need to avoid supply
problems like the ones which occurred in California.

Regarding the situation of the market in gas

(37)

The Spanish authorities consider that the market in gas is in expansion. Volume has indeed
increased by 12,1 % between 1997 and 2000 (7). Value has also increased, as the table below
shows:

Value of consumption of natural gas by type of user (*)

(ESP million)

1993

1994

1995

1996

1997

1998

1999

Domestic (cid:150)
commercial

97 103

102 187

131 743

160 087

171 095

209 358

240 677

Industrial

72 962

91 737

120 194

141 560

183 106

188 078

217 251

Electric
plants

615

1 038

1 397

3 859

35 800

11 169

12 355

Total

170 680

194 962

253 334

305 506

390 001

408 605

470 283

(*) Source: BBG.

(38)

The Spanish authorities also note that the estimates for the following years indicate a continuing
increase in the demand for natural gas and, in particular, an increase in the demand for natural gas
used for the generation of electricity.

Regarding eligible investments

(39)

The Spanish authorities accept the Commission’s view on the inappropriateness of classifying part
of the costs as (cid:145)intangible assets(cid:146). Consequently, eligible investments have been modified as follows:

(7) Source: Eurogas.

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L 329/15

BBG project

2000

2001

2002

12 704

25 983

16 000

29 014

81 745

46 908

60

433

1 050

Buildings

Equipment

Furniture

Spare parts

Construction fee

Construction insurance

175

307

1 050

307

Construction taxes

2 820

2003

3 336

7 272

282

2 145

525

(EUR 1 000)

Total

58 023

164 939

342

2 578

2 800

614

2 820

Total

45 020

109 085

64 451

13 560

232 116

BBE project

2000

2001

Buildings

7 563

17 702

2002

9 355

Equipment

51 157

131 919

50 051

(EUR 1 000)

2003

Total

1 391

9 584

36 012

242 710

Furniture

Spare parts

Construction fee

Construction
insurance

Water supply

Electricity
substation

Construction
taxes

591

724

41

2 003

98

724

10

501

4 015

517

9 454

591

41

2 003

517

9 454

1 280

1 448

92

4 507

4 015

Total

64 068

152 980

72 012

10 975

300 035

(40)

The Spanish authorities explain the various headings as
follows:

(cid:151) buildings: control building, workshops, warehouses
and office buildings. Also covers earth moving
(levelling)
(installations
civil
necessary for the operation of the plants),

engineering

and

(cid:151) equipment: also covers machine assembly,

(cid:151) furniture: furniture and other equipment for offices
and industrial buildings which cannot be considered
industrial equipment,

(cid:151) spare parts:

selected spare parts of
available

strategic
importance which must
the
at
production centre, required by the suppliers of the
equipment to guarantee the operation of the plants,

be

(cid:151) water supply: since the plant sites have no source of
drinking water, construction of a new 7 km pipeline
to provide drinking water, mainly for the electricity
plant,

(cid:151) electricity

necessary
infrastructure for the electricity plant. Its purpose is

substation:

part

the

of

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Official Journal of the European Communities

5.12.2002

to bring the generation voltage (15,4 kW) up to the
transport voltage (400 kW),

6. ASSESSMENT OF THE AID

(cid:151) construction fee: this is the fee for occupation of the
publicly owned seafront which must be paid to the
Bilbao Port Authority, for the period of construction
and operation of the plants,

(47)

(cid:151) construction insurance: covers possible damage to
equipment during transport and assembly, plus civil
liability,

(cid:151) construction taxes:

local

taxes on construction,

installations and works.

Regarding the indirect jobs

(41)

indirect

The Spanish authorities say that there is no duplication
of
jobs between the two projects, since the
cleaning staff (2), unskilled workers (2), security (9,7)
and canteen staff (4) are actually assigned to each of the
two projects.

(48)

(42) As regards the jobs defined as (cid:145)administration(cid:146)

these posts are a consequence of
work generated by the other indirect jobs.

(BBE),
the administrative

(43)

(44)

(45)

(46)

Finally, the Spanish authorities have agreed not to count
as indirect jobs the 50 jobs for the BBG project relating
to transport activities
the two methane
for
(crews
carriers which supply the gas plant).

Consequently, the Spanish authorities now consider the
number of indirect jobs as 23,2 for the BBE project and
34,05 for the BBG project. They confirm the number of
direct jobs (39,5 jobs for each of the two projects),
which was not called into question in the decision to
initiate the procedure.

Regarding the maximum allowable intensity

In view of the above, the Spanish authorities conclude
that the intensities envisaged by the Basque Government
are in line with the limits laid down in the multisectoral
framework, taking into account the value attributed to
the various parameters provided for in the framework.

The maximum allowable intensity for the BBE project
is therefore 20 (cid:215) 1 (cid:215) 0,6 (cid:215) 1,1 = 13,2 %
(R (cid:215) T (cid:215) I (cid:215) M)
nge,
project
the
and
20 (cid:215) 1 (cid:215) 0,6 (cid:215) 1,2 = 14,4 % nge.

BBG

for

investment

the cost of

The grants provided by the Spanish authorities give an
advantage to both the beneficiaries, by freeing them
from part of
they would
otherwise bear. As these are two individual projects, it is
evident that this advantage is of a selective nature in
relation to other firms which would like to make such
investments. Moreover, the measures in question could
affect intra-Community trade, with particular regard to
the progressive opening up of the electricity and gas
markets. Finally, the grants are awarded directly by the
Basque Government and, as a consequence, should be
considered as coming from state resources. They must
therefore be considered State aid within the meaning of
Article 87(1) of the Treaty.

Furthermore, the notification submitted by the Spanish
authorities provides for a nominal grant of EUR 30
million for the BBE project and EUR 23 200 000 for the
BBG project, which is a total of EUR 53 200 000. In
these circumstances, in accordance with point 2.1 (ii) of
the multisectoral framework, this project falls within the
in accordance with the
scope of the latter. Moreover,
second paragraph of point 7.2 of
the multisectoral
framework, and taking account the envisaged synergy
between the two projects (the two projects would not
have been carried out independently of each other, BBE
using 40 % of BBG production capacity),
the two
projects should be considered, as the Spanish authorities
have requested, as a single project for the purposes of
the application of the multisectoral framework.

(49) As indicated in recital 22, the Commission expressed
doubts over the project. The questions arising from
these doubts are examined below.

As regards the regional justification of the project

(50) As indicated in the decision to initiate the procedure,
the Commission has established that the project does
not fall within the scope of a Commission-approved aid
scheme, and is consequently an ad hoc aid measure. The
Spanish authorities have not
contested this. The
Commission must therefore check, in accordance with
the second paragraph of point 2 of the Guidelines on
national regional aid (8) whether the advantages for the
region offset the distortions of competition which the
ad hoc aid can cause. The Commission would also point

(8) OJ C 74, 10.3.1998, p. 9.

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Official Journal of the European Communities

L 329/17

out that the whole of the Basque Country is an assisted
area, in accordance with Article 87(3)(c) of the Treaty.

be regarded as compensating to a certain extent for the
distortion of competition which may result from the
aid.

(51)

Indeed,

the multisectoral

The Commission notes in this regard that, in this case,
the provisions of the second paragraph of point 2 of
the guidelines on national regional aid have already
been largely taken into account through the application
framework on
to this project of
regional aid for large investment projects, which apply
to ad hoc aid in accordance with point 3.1 of that
instrument and the footnote on page 7.
in
Section 1 of
the framework, entitled (cid:145)Need for and
scope of the measure(cid:146), point 1.1 provides that (cid:145)[(cid:133)] it is
important
to strike an appropriate balance between
three core objectives of EU policy, namely undistorted
competition in the internal market, economic and social
cohesion and industrial competitiveness(cid:146), and point 1.2
that (cid:145)[(cid:133)] The Commission is therefore introducing this
framework [(cid:133)] with the aim of
limiting aid for
large-scale projects to a level which avoids as much as
possible adverse effects on competition but which at the
same time maintains the attraction of the assisted area.
[(cid:133)](cid:146). Nevertheless, in view of the wording of the second
paragraph of point 2 of
the Guidelines on national
regional aid,
the Commission considers that a brief
analysis is required in addition to that which is provided
for by the multisectoral framework.

(52)

In this regard, the Spanish authorities have indicated
firstly that this project will help to improve the Basque
Country’s level of self-sufficiency in electricity. However,
the Commission considers
the objective of
self-sufficiency in a particular region, while a legitimate
aim, does not in itself meet the requirements of the
second paragraph of point 2 of
the Guidelines on
national regional aid.

that

(53) On the other hand, an important point to remember is
that the project will help to improve the production and
distribution of energy in areas which are currently
lacking in this respect.

(54) As

the

have

Spanish

indicated,

authorities

improvement of

contribution to the

the
Commission considers that the BBG project will make a
decisive
the
in view of the fact
distribution system in the region,
that the Basque Country is far from the main entry
points for gas in the Iberian Peninsula. It is to be hoped,
therefore, that by bringing the point of entry of the gas
closer to the consumer, distribution of natural gas in the
transport will
region will
decrease
in
particular in this regard that 60 % of the regasification
plant’s
the market.
Consequently,
the contribution made by the BBG
project to the development of the Basque Country can

substantially. The Commission notes

increase and the cost of

production

intended

for

is

(55)

The BBE project, on the other hand, is a major project
which, according to the University of Deusto study
carried out by the Spanish authorities, could alone
represent 0,188 % of the GNP of the region.

(56)

(57)

(58)

(59)

the

except

application of

The Commission therefore concluded that, on this
point, the doubts it had expressed in its decision to
initiate the procedure regarding the justification of the
project from a regional development point of view had
been resolved,
the
for
framework, which is examined below.
multisectoral
Furthermore,
the total
the Commission notes
current capacity of the Spanish electricity system may
sometimes be insufficient at peak times
to satisfy
demand, as was patently obvious in December 2001,
when there were power cuts in Spain, and that the need
for new investment in electricity plants to avoid such
cuts has been unanimously recognised by all
those
involved in the Spanish electricity system.

that

Regarding the situation of the electricity market in Spain

In its decision to institute proceedings, the Commission
expressed doubts over the possibility that the Spanish
electricity market (the relevant geographic market for
the BBE project) was in decline,
the
available data on the evolution of the market in value
terms.

in the light of

The data submitted by the Spanish authorities on the
evolution of the electricity market in Spain in value
terms (see table in recital 33) shows that there was a
decrease in the value of electricity consumption in 1997
(increase of only 0,5 % compared with the previous year
in which there was an increase of 2,8 %), 1998 (net
decrease of 3,3 %) and 1999 (net decrease of 0,27 %).
On the other hand, there was an increase of 4,28 % in
2000.

apparent

consumption of

In the light of these figures, the Commission notes that
the
electricity in Spain
increases on average by 0,7 % per year, which is more
than 10 % lower than the annual average growth rate
for the manufacturing sector of the EEA as a whole.
Moreover, the increase in 2000 (+ 4,28 %) relates to a
single year and the data available to the Commission
shows no such increase for 2001. This shows that there
is no sharp upward trend within the meaning of point

(60)

(61)

(62)

L 329/18

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5.12.2002

the multisectoral

7,8 of
framework. The Spanish
electricity market must therefore be considered as being
in decline within the meaning of point 7,8 of
the
framework (9).

the Commission concludes

Consequently,
the
doubts which it expressed in its decision to initiate the
the Spanish
regarding the
procedure
electricity market were well-founded.

situation of

that

(66) However,

fee(cid:146)

and

parts(cid:146),

(cid:145)construction

the Commission is still sceptical

that
the
(cid:145)construction
(cid:145)spare
insurance(cid:146) sections constitute eligible expenditure within
the meaning of point 4.5 of the Guidelines on national
regional aid. Such costs would seem rather
to be
operating costs. According to the explanations provided
by the Spanish authorities, the spare parts are items
which must be available to allow the plant to operate
(so after construction of the plant), and the construction
fee is to be paid to the Bilbao Port Authority both
during the construction and operation of the plant. As
regards
it has not been
demonstrated that it should be classified as a fixed asset.

construction insurance,

Regarding the justification of certain eligible expenditure

(67)

In its decision to initiate the procedure, the Commission
expressed doubts regarding the justification of certain
eligible expenditure and, in particular, the classification
(cid:145)intangible assets(cid:146) as eligible expenditure and the
of
the heading
inclusion of certain expenditure under
(cid:145)buildings(cid:146).

Spanish authorities have

The
a new
breakdown of eligible expenditure (see recitals 39 and
40), including explanations of the various sections.

submitted

(63)

The Spanish authorities quote a total
232 116 000 for the BBG project.

figure of EUR

(64)

the

that

firstly

in point 4.6 of

The Commission notes
Spanish
authorities have removed the (cid:145)intangible assets(cid:146) section,
which the Commission had questioned in its decision to
initiate the procedure on the grounds that it did not
appear to correspond to the definition of such assets as
set out
the Guidelines on national
regional aid. The Spanish authorities have explained that
the costs
this heading are actually
engineering costs which they have, therefore, included
under the heading (cid:145)buildings(cid:146). The Commission feels that
engineering costs form an integral part of construction
the
for buildings
costs
amended section on buildings.

and can therefore

included under

accept

(65)

The Commission also considers that
the (cid:145)equipment(cid:146),
(cid:145)furniture(cid:146) and (cid:145)construction taxes(cid:146) sections constitute
eligible expenditure within the meaning of point 4.5 of
the Guidelines on national regional aid.

(9) The Commission considers that it cannot base its deliberations on
the volume figures communicated by the Spanish authorities, since
these do not allow a comparison with manufacturing industry as a
whole, as required by point 7.8 of the multisectoral framework.

(72)

The Commission therefore considers
the total
eligible expenditure figure for the BBG project is EUR
EUR
226 124 000, which represents
212 038 000 discounted to 31 December 2000.

total of

that

a

(68) As regards the BBE project,

the Spanish authorities

quote a total figure of EUR 300 038 000.

(69) As with the BBG project, the Commission notes that the
Spanish authorities have removed the (cid:145)intangible assets(cid:146)
section, which the Commission had questioned in its
decision to initiate the procedure on the grounds that it
did not appear to correspond to the definition of such
assets as set out
the Guidelines on
in point 4.6 of
national regional aid. The Spanish authorities explained
that the costs included under this heading are actually
engineering costs which they have, therefore, included
under the heading (cid:145)buildings(cid:146). The Commission feels that
engineering costs form an integral part of construction
costs
the
for buildings
amended section on buildings.

and can therefore

accept

(70)

the (cid:145)equipment(cid:146),
The Commission also considers that
(cid:145)furniture(cid:146) and (cid:145)construction taxes(cid:146) sections constitute
eligible expenditure within the meaning of point 4.5 of
the Guidelines on national regional aid.

(71) However,

for the reasons set out

the
parts(cid:146),
Commission
(cid:145)construction fee(cid:146) and (cid:145)construction insurance(cid:146) sections
are not justified.

in recital 66,
(cid:145)spare

considers

that

the

The Commission therefore considers
the total
eligible expenditure figure for the BBE project is EUR
287 853 000, which represents
EUR
271 490 000 discounted to 31 December 2000.

total of

that

a

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Official Journal of the European Communities

L 329/19

(73)

(74)

(75)

Justification of certain indirect jobs

In its decision to initiate the procedure, the Commission
expressed doubts about
the justification for certain
indirect jobs provided for by the Spanish authorities. In
particular, the Commission had established that certain
jobs appeared in both projects (jobs relating to security,
cleaning, unskilled workers and canteen and other staff).
Nor did the Commission consider justified the jobs
pertaining to the transport of gas (crews of methane
carriers). Finally, the Commission considered that the
two jobs for the BBE project relating to (cid:145)administration(cid:146)
were not justified.

the Commission notes

Spanish
Firstly,
authorities have withdrawn the 50 indirect jobs relating
to the transport of gas (BBG project).

that

the

The Commission also notes that the Spanish authorities
have confirmed that jobs relating to security (9,7 jobs),
(2 jobs) and
cleaning (2 jobs), unskilled workers
cafeteria and other services (4 jobs) are in fact assigned
to each project and that there is no duplication. The
Commission therefore accepts these jobs.

(76) However,

are

the

that

jobs

the Commission considers

the jobs
relating to administration have not been sufficiently
justified by the Spanish authorities. The latter have said
only that
the
administrative work generated by the other indirect
jobs. The Commission is at a loss
to see what
connection there is between these jobs and the other
indirect jobs, nor why the indirect jobs generate this
administrative work only for the BBE project and not
the BBG project.

consequence of

the

from the

competition

resulting
the
capital-labour factor (I) and the regional impact factor
(M) (R (cid:215) T (cid:215) I (cid:215) M, where the result may not exceed R,
in accordance with the note in point 3.10).

factor

(T),

Maximum regional aid ceiling (R)

(79) According to point 3.1 of the multisectoral framework,
the regional aid ceiling is the maximum aid intensity
which a large company could obtain in the assisted area
concerned within the context of the authorised regional
aid system valid at the moment of notification (unless it
is ad hoc aid in which case the aid ceiling fixed for the
region concerned will be applied). In accordance with
the Spanish regional aid map,
the maximum aid
the Basque Country, all of which is
intensity for
considered an assisted area under Article 87(c) of the
Treaty, is 20 % nge.

The (cid:145)competition(cid:146) factor (T)

(80) As regards the BBE project, as indicated in recital 60,
the Commission has concluded that the doubts which it
expressed in its decision to initiate the procedure
regarding the situation of the Spanish electricity market
were well-founded, and considers that this market is in
decline within the meaning of point 7.8 of
the
multisectoral framework. Consequently, a value of 0,75
should be attributed to factor (T).

(81) As

regards

the BBG project,

the Commission had
already concluded in its decision to initiate
the
procedure that the Spanish gas market was neither in a
situation
decline.
Consequently, the value to be attributed to factor (T) is
1,00.

overcapacity

structural

or

of

(77)

In view of the above, the Commission considers that the
number of indirect jobs is 21,2 for the BBE project and
34,05 for the BBG project.

(82)

Assessment of the maximum allowable intensity

The (cid:145)capital-labour(cid:146) factor (I)

for

the

total

the BBE project

eligible
In accordance with recital 72,
expenditure
is EUR
figure
287 853 000. The number of direct jobs envisaged by
the Spanish authorities is 39,5. The capital-labour factor
is therefore 7,297. In these circumstances, a value of 0,6
should be attributed to factor (I),
in accordance with
point 3.10.2 of the multisectoral framework.

(78)

In accordance with point 3.1 of
the multisectoral
framework, the Commission will determine, using the
formula set out in point 3.10 of the framework, the
maximum allowable intensity for a notified project. This
coefficients
formulais obtained by multiplying the

(83) As

the BBG project,
for
figure

eligible
regards
expenditure
is EUR
226 124 000. The number of direct jobs envisaged by
the Spanish authorities is 39,5. The capital-labour factor

total
the BBE project

the

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5.12.2002

is therefore 5,725. In these circumstances, a value of 0,6
in accordance with
should be attributed to factor (I),
point 3.10.2 of the multisectoral framework.

net grant equivalent, the maximum allowable intensity
framework, as
under point 3.1 of
calculated in recital 86.

the multisectoral

The (cid:145)regional impact(cid:146) factor (M)

7. EX-POST MONITORING

(84) As regards the BBE project, the Commission estimated
in recital 77 that this project will result in 21.2 indirect
jobs. Taking into account the number of direct jobs
(39,5),
job
creation of 54 % of the figure for direct jobs created by
the recipient of the aid. Consequently, the value to be
attributed to factor (M) is 1.1 in accordance with point
3.10.3(ii) of the multisectoral framework.

this gives an average of rate of

indirect

Regarding the BBG project, the Commission estimated
in recital 77 that this project will 34,05 indirect jobs.
Taking into account the number of direct jobs (39,5),
this gives an average of rate of indirect job creation of
jobs created by the
86 % of
recipient of
the value to be
attributed to factor (M) is 1,1 in accordance with point
3.10.3(ii) of the multisectoral framework.

the aid. Consequently,

the figure for direct

(90)

(91)

(92)

The Spanish authorities have agreed to incorporate a
contract with the
reimbursement
beneficiaries in the event of
failure to complete the
contract.

in the

clause

The Spanish authorities have also undertaken to send
the Commission a copy of
the contract with the
beneficiaries regarding the aid.

Finally, the Spanish authorities have undertaken to send
the Commission an annual
report on the project,
containing in particular information on subsidies already
paid, intermediate reports on the implementation of the
aid contract and a final
report outlining progress
towards objectives (timetable, investments and fulfilment
of specific conditions in the contract drawn up by the
granting authority) and detailing progress.

Maximum allowable intensity

(93)

These undertakings are in line with point 6 of
multisectoral framework.

the

8. CONCLUSIONS

the

each of

In view of the above, the maximum allowable intensity
is
two projects
for
20 (cid:215) 0,75 (cid:215) 0,6 (cid:215) 1,1 = 9,9 % nge for the BBE project,
and 20 (cid:215) 1 (cid:215) 0,6 (cid:215) 1,1 = 13,2 % nge
the BBG
project, both of which are well below 20 % nge.

(R (cid:215) T (cid:215) I (cid:215) M)

for

represents

For the BBE project, as indicated in recital 72,
the
amount of eligible expenditure is EUR 287 853 000,
EUR 271 490 000
which
discounted to 31 December 2000. Since the nominal
amount of the aid is EUR 30 004 000, with a reference
and discount rate of 5,7 % and a tax rate of 32,5 %, the
intensity for the BBE project is 7,88 % nge.

total

of

a

represents

(88) As regards the BBG project, as indicated in recital 67,
the amount of eligible expenditure is EUR 226 124 000,
which
EUR 212 038 000
total
discounted to 31 December 2000. Since the nominal
amount of the aid is EUR 23 212 000, with a reference
and discount rate of 5,7 % and a tax rate of 32,5 %, the
intensity for the BBG project is 7,80 % nge.

of

a

(94)

these

to observance of

The Commission reminded the Spanish authorities of
the need to respect the rules on the cumulation of aid
for identical purposes granted under schemes approved
by one or more authorities (at central, regional or local
the
level). Subject
Commission concludes that the aid envisaged for the
two projects may be granted.
the
Commission has noted that
the Spanish authorities
indicated by letter dated 23 May 2000 that both
undertakings had waived the opportunity to benefit
from a tax credit of 45 % on the basis of assessment
totalling ESP 54 149 million (EUR 325 442 040) for the
BBE project and ESP 43 486 million (EUR 261 360 000)
for the BBG project.

In this

regard,

rules,

HAS ADOPTED THIS DECISION:

Article 1

(85)

(86)

(87)

(89)

The Commission therefore finds
the subsidies
envisaged by the Spanish authorities do not exceed, in

that

The State aid which Spain plans to grant to BBE and BBG,
totalling EUR 30 004 000 and EUR 23 212 000 respectively, is

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Official Journal of the European Communities

L 329/21

compatible with the common market within the meaning of
Article 87(3)(c) of the Treaty.

Article 3

This Decision is addressed to the Kingdom of Spain.

The granting of such aid is therefore authorised.

Article 2

Done at Brussels, 19 June 2002.

The Spanish authorities shall take the necessary steps to ensure
that should other regional aid be granted to these projects, the
total should not exceed 9,9 % for the BBE project and 13,2 %
nge for the BBG project.

For the Commission

Mario MONTI

Member of the Commission