The European Commission is looking into how Slovakia covers up support for the private mining company, Hornonitrianske Bane Prievidza. Its office workers are currently scrutinising the subsidy used by the chief power producer Slovenské Elektrárne (SE) which subsequently buys brown coal from the mines to burn in the power plant in Nováky, the Sme daily reported.
This process however is not voluntary as SE is only following the instruction from the Slovak Economy Ministry, which claims that it is in the general interest to keep employment in the mining sector. The ministry adopted its latest decision on this issue in September 2015 and ordered the company to continue producing electricity from coal until 2030, Sme wrote.
Since such production is loss-making, SE is entitled to ask for an additional payment. This year it is expected to receive €95 million, according to the decision made by the Regulatory Office for Network Industries.
“We are in contact with the Slovak authorities in connection with their support for electricity production from the local brown coal at the Nováky power plant,” the EC claimed in its statement, as quoted by Sme.
If the EC decides that such practice is unauthorised state aid, the government would have to ask SE to return the money, according to the daily.
Despite the scrutiny, the EC is not investigating Hornonitrianske Bane Nováky. It is dealing only with the order for SE to purchase the brown coal. The fact is however that all households pay for the additional payment as part of their electricity bill. It amounts to €4 a month on average, Sme calculated.
The EC started its scrutiny based on a motion submitted by the European Institute for Protection of Consumers and the Rule of Law, which claims that the subsidies on electricity generated from brown coal are at odds with European regulations.
The problem is that the Hornonitrianske Bane Prievidza company, controlled by businessman Peter Čičmanec, is also indirectly subsidised via this scheme. The reason is that it is the only company that mines local brown coal. Though the Economy Ministry does not claim anywhere that it subsidises this company, the order makes SE generate electricity from the coal that can be obtained only from Hornonitrianske Bane Prievidza, Sme wrote.
The scheme to support miners was first introduced by the Mikuláš Dzurinda government in 2005, while the following ministers have only prolonged the deadlines, without changing the mechanism.
Even though the money is received by SE, it ends up in Hornonitrianske Bane Prievidza, according to Sme. The chair of the mining company’s supervisory board Rastislav Januščák however claims that part of the money ends up in the state budget in the form of paid taxes, payroll levies, VAT and fees for emission permissions, calculating the sum to be €31 million a year.
Though the current support for brown coal mining is expected to last until 2030, there is a possibility it may end sooner, as Economy Minister Peter Žiga (Smer) has recently admitted. He wants to analyse the possibilities, Sme reported.