Brussels, 30/07/2007 (Agence Europe) - The European Commission plans to publish guidelines on state aid in the rail sector before the end of the year. Keen to see the rail sector revitalised, the Commission plans to act in five areas (construction and maintenance of infrastructure, reduction of historic debts, withdrawal of state guarantees, promotion of interoperability, revival of rail freight companies) involving especially infrastructure managers and rail transport companies. The document, which has been put out for inter-service consultation within the Commission, still has to be put out for consultation by stakeholders, before it can be adopted by the College of Commissioners, probably at the end of year. It seeks to clarify and amend current rules on aid, Article 73 (aid relating to transport coordination needs or to the reimbursement of some obligations inherent in the notion of public service) and Article 87 (state aid) of the EC Treaty.
In terms of infrastructure and in general terms, public support guaranteed by member states to operators or to infrastructure managers should not be considered to be state aid and, therefore, should not be notified, the Commission deeming that in this instance, infrastructure managers act as public authorities in a not very competitive sector. More precisely, public aid should not be notified to the Commission if access to the infrastructure is open to all users; in other words, if it is a matter of general interest. Public support would be accepted in those member states which, like Germany and Italy, have decided to partially open their local and national markets, and which authorise a commercial operator, other than the main operator, on part of the network. As long as the public funding to this operator is used to cover the costs of the maintenance, management and provision of rail transport service which it offers, the aid will be deemed to comply with European legislation.
With regard to concessions for special construction and management work, such as the construction of tunnels and bridges, projects will have to be notified when member states decide to compensate contractors above the amounts set in the contract, which should reflect market costs. The same principle will apply in public-private partnerships (PPPs) where the projects will not have to be notified unless the private partner was chosen following a call for tenders which resulted in a contract worth more than the market price.
Neither will public subsidies will be considered as state aid for some public service obligations (PSOs), for example those to ensure the safety and interoperability imposed on managers, as long as they meet the criteria of the “Altmark” ruling (the beneficiary company must be effectively responsible for carrying out the clearly defined PSOs; the parameters for calculating the compensation must be defined beforehand; compensation must not exceed the costs involved - see EUROPE 8511).
In terms of historic debts and debt relief mechanisms the guidelines will set out which debts can be covered by Article 9 of directive 91/440, which requires member states to put in place the necessary mechanisms to help reduce rail companies' debts. The assessment of the aid granted in this area will be carried out in relation with the opening of the market. With regard to Trans-European rail freight networks (see EUROPE 7601), which were opened to competition on 15 March 2003, the Commission will not consider write-offs decided on, and carried out before that date, as state aid. However, member states will be required to notify any write-offs before that date which took effect after 15 March 2003.
In general terms, write-offs linked to financing of infrastructure, to deficits resulting from activities relating to infrastructure management, or to under-compensation for PSOs which meet the Altmark criteria will not have to be notified to the Commission. However, aid mechanisms for reducing rail companies' debt which has resulted from transport activity operational deficits or from some investment related to transport operations after 15 March 2003, such as investment in rolling stock and PSO compensations other than those which meet the Altmark ruling criteria, are likely to be considered to be state aid. For the new member states, their date of accession (1 January 2007 for Bulgaria and Romania, and 1 May 2004 for the ten Central and Southern European states) will be deemed to be the reference point from which debt aid mechanisms can be considered state aid.
State guarantees (more favourable credit conditions obtained by companies whose status does not provide for the possibility of bankruptcy or insolvency) will be withdrawn before 1 January 2010 for rail companies operating in a market open to competition (especially, therefore, rail freight companies). The transport companies concerned will have to inform the Commission before 31 December 2008 of how state guarantees are obtained and the arrangement under which they are to be withdrawn. There will be full withdrawal of unlimited guarantees before 1 January 2010. A similar rule will apply to companies, whether or not they operate in a competitive market, whose guarantees are of benefit to the company as a whole. Unlimited guarantees awarded to companies involved exclusively in passenger transport, insofar as they constitute state aid, will also have to be notified to the Commission and withdrawn before 1 January 2010.
With regard to state aid for transport coordination (interoperability), the guidelines seek to complement the legal regime hitherto established by Article 73 of the Treaty and put in practice by regulation 1107/70, which will soon be repealed. According to the new conception of coordination of transport, state aid will include: aid granted to companies which have to bear costs related to the infrastructure which they use and aid to encourage modes of transport which generate lower external costs than other transport modes. The amount of aid will, however, be limited to the minimum required (principles of Community interest and proportionality) to cover actual expenditure; the aid should also compensate infrastructure costs not supported by competitor modes of transport and conditions for granting aid should be non-discriminatory. These aid programmes will be time limited, but the Commission does not, in this document, specify how long this will be. The Commission will distinguish between the various aims of this aid. Thus, aid granted to encourage interoperability, improved safety and eliminate technical barriers should focus on the reduction of environmental damage, with the aim of promoting a modal shift and the development of the rail infrastructure. On the other hand, the Commission believes that the maximum aid award should not exceed 50% of the eligible costs of the investment. Aid for research and development in the rail sector should, the Commission says, be limited to the research phase. Finally, aid to remove overcapacity leading to serious structural difficulties in the rail passenger transport sector may be compatible with European legislation, until the rail passenger transport market is opened up to competition, on condition that it is exceptional and temporary.
Aid for the renewal of rolling stock will be concentrated on rail freight transport. According to the Commission, if there is no change to current trends (1% of the freight stock is replaced annually and the average age of the stock is 27 years), the European freight stock will be reduced by 25% by 2020. The Commission considers, therefore, that the system under which aid is granted to rail companies can be compatible with Article 87 (state aid) of the Treaty.
Once these guidelines have been adopted, member states will have two years to amend their existing aid systems in order to comply with them. The Commission will carry out an assessment report on these new measures five years after their publication in the Official Journal of the EU. (aby)