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Support for energy-intensive manufacturing companies

From October 18 of this year, energy-intensive companies in the manufacturing industry may apply for the new aid programme to compensate the increase in electricity and natural gas prices for the period from February 1 to December 31, 2022.


The program was created with the aim of reducing the consequences of the Russian military aggression against Ukraine on the economy, which has resulted in a significant increase in the prices of energy resources. For industrial companies, the cost of energy in manufacturing is a much larger part of the costs than in other industries, so support is intended for energy-intensive enterprises to maintain and continue their activities.


Support is provided in the form of a grant.


The total state budget financing amounts to 50 million EUR.


The support program will be implemented by the State Construction Control Bureau of Latvia (SCCB).


!!! Decision-making and aid disbursement will begin after receiving approval from the European Commission.

 

What companies are eligible for support?

Merchants who meet the following conditions may apply for support:

  • costs for energy resources have significantly increased due to the Russian military aggression against Ukraine;
  • the main economic activity is carried out in the manufacturing industry in one of the sectors mentioned in the Annex to the Cabinet of Ministers Regulation No. 638 (codes 10xx, 11xx, 13xx - 33xx of the relevant NACE 2nd edition);
  • the cost of energy resources is not less than 3% of the total costs of the merchant's economic activity in 2021;
  • the total consumption of electricity or natural gas for the needs of the merchant in 2021 was at least 500 megawatt-hours (MWh).

 

Conditions for receiving support:

Support period: from February 1, 2022 to December 31, 2022; for October, November and December, the support is applied as an advance payment.

Grant support for one merchant can be up to 30% of the eligible costs of natural gas or electricity, but not more than 2 million EUR.

Eligible costs are defined as the difference between the price per unit in a given month that the merchant as a final consumer has purchased from external suppliers in the period from February 1 to December 31, 2022, and would double (200%) the average price per unit that the merchant paid in the period from January 1 to December 31, 2021.

From September 1, 2022, the amount of natural gas and electricity used to calculate eligible costs may not exceed 70% of the recipient's consumption during the same period in 2021.

 

Restrictions on receiving support:

The following economic operators are not eligible for support:

  • international or national sanctions have been applied to the merchant, or persons from Russia or Belarus have a direct or indirect decisive influence in the company;
  • tax debts exceed 1 thousand EUR (does not apply to tax payments for which an extension of the payment term has been granted, an agreement on voluntary payment or a settlement agreement has been concluded);
  • economic activity has been terminated or insolvency proceedings have been declared or there are signs of insolvency proceedings;
  • a recovery order is applicable in accordance with a previous decision of the European Commission declaring the aid unlawful and incompatible with the common market.

 

Sectors not supported by the program:

  • arms and ammunition and alcohol trade;
  • production and sale of tobacco products;
  • gambling and betting, financial and insurance activities;
  • activities with real estate and development of residential real estate;
  • credit institutions or other financial institutions;
  • sectors that are not included in the Annex to the Cabinet of Ministers Regulation No. 638.

 

If a merchant operates in both the supported sector and the non-supported sector at the same time, he can qualify for support by ensuring separation of operations or costs.

Submission of applications:

Period for acceptance of applications: from 18 October 2022 to 17 November 2022 (inclusive).

  • Applying for support by sending the following documents, signed with a secure electronic signature, to
  • atbalsts@bvkb.gov.lv:
  • application
  • and support calculation form;
  • electricity and/or natural gas bills for the year 2022;
  • electricity and/or natural gas bills for 2021;
  • a conclusion of a sworn auditor that the merchant's energy resource costs in 2021 are at least 3% of the merchant's total economic activity costs;
  • annual report for 2021;
  • other documents if necessary.

A merchant can apply for support only once for the entire period or for a specific month/s when an increase in costs is detected.

 

Making a decision and paying a grant:

Decisions will be made by December 31, 2022. The grant payment will be made within 5 working days after the decision is made.

Support will be granted within the available funding, taking into account the order in which applications are submitted.

 

Follow-up period:

The recipient of the aid is obliged to keep the data on the aid for 10 years from the day when the decision to grant the aid was made.

During the aid monitoring period, SCCB will check:

  • the maximum amount of state aid paid in advance, based on actually made payments for natural gas and electricity, and no later than 6 months. within the period after the end of the support period, will recover all support payments that exceed the mentioned maximum amounts;
  • randomly selected 10% of the total number of merchants who received support;
  • the merchant's compliance with the criteria for receiving a grant, if there is a possible risk of granting illegal state aid.

If a violation of state aid requirements is found, the merchant is obliged to repay to the state budget all illegal state aid received together with interest.

 

The program is governed by Cabinet of Ministers Regulation No. 683 of 11 October 2022 "Procedure in which support is granted and administered to energy-intensive processing industry merchants in order to reduce the economic consequences of Russia's military aggression against Ukraine".

 

 

If you need help in attracting the mentioned support, please contact Leinonen SIA.

In addition, we can also provide support in other financing projects:

  • projects of EU funds;
  • State programs of crisis support;
  • Attraction of financing from credit institutions and other financial institutions for investment or working capital.


25.10.22


Author:   

Ilona Adamaite

Ilona Adamaite

Investments and Finance Advisor

Mobile: +371 24 664 392

Email: ilona.adamaite@leinonen.lv

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