The European Commission (EC) has closed its investigation under state aid rules and found the French government guarantee insuring a loan to TVO does not constitute state aid.
The loan finances TVO’s purchase of part of Olkiluoto 3 from Areva.
The EC said the guarantee would confer no advantage to TVO.
First, the EC found that TVO had sufficient access to financial markets to finance the whole project without any state intervention. The financing of the project is therefore not dependant on the state guarantee.
Secondly, it found that the guarantee premium paid by TVO to the French government is not below the market price.
In December 2003, TVO concluded an agreement with a consortium comprising Areva and Siemens for the plant’s construction.
The global amount of the turnkey project was estimated at €3 billion. In order to finance this project, TVO raised fresh equity capital from its shareholders and concluded loans.
One of the loans, for €570 million, is guaranteed by Coface, the company that manages export-credit insurance on behalf of the French government. For this guarantee, TVO pays a fee to the French government called the “guarantee premium”.
In October 2006, the Commission opened its investigation on the basis of two complaints, a formal investigation procedure to verify whether the guarantee had been granted on market terms and did not include state aid elements.
According to EU state aid rules, a state loan guarantee would constitute an aid when it confers an advantage to the borrower. It may enable the borrower to obtain funds it would not have been able to raise otherwise. It may also lower the borrower’s financing costs below what it would have had to pay on the market.
