Latvia: Public financing of port infrastructure in Krievu Sala
On 5 February 2010, the Latvian Republic notified a public financing measure within the project Development of infrastructure on Krievu Sala for reallocation of port activities out of the city centre. The notified measure aims to address this relocation and ensure that the Freeport of Riga maintains its competitiveness within the Baltic Sea.
The direct beneficiary of the public financing under scrutiny is Riga Freeport Authority.
The project will be developed in two phases:
(a) the first phase concerns the construction of 4 dry bulk cargo berths and will be completed by 2012 (hereinafter the first phase);
(b) the second phase concerns three additional berths, for the handling of general cargo, which will be constructed by 2015 (hereinafter the second phase).
The total eligible costs of the two phases amount to EUR 195 380 916. As far as first phase of the project is concerned, the eligible costs are to be financed by means of the Cohesion Fund contribution up to approximately 61.2%, i.e. EUR 91 325 093. The remaining will be ensured by means of own resources of the port authority. The eligible costs of the second phase amount to EUR 46 171 655, with a public financing up to EUR 28 062 565.
The commission found that the measure constitutes State aid within the meaning of Article 107 (1) TFEU and gave the following assessment:
Riga Freeport is currently one of the leading ports on the Baltic Sea. In terms of total throughput, Primorsk and St. Petersburg are the primary ports in the East Baltic Sea region, followed by Klaipeda, Tallinn and Ventspils. In terms of dry bulk and general cargo handling Riga Freeport's main competitors are Hamina, Helsinki, Kotka (Finland), Kaliningrad, St. Petersburg, Ust –Luga (Russia), Tallinn (Estonia), Ventspils and Liepaja (Latvia). Klaipeda (Lithuania), Gdansk, Gdynia (Poland). Of these Riga, St. Petersburg, Klaipeda, Ventspils and most recently Ust-Luga ports are the largest in terms of dry bulk cargo turnover.
According to the Latvian authorities, in terms of dry bulk cargo handling operations the FR is a leading port with a market share of 43%. At the same time, in terms of general cargo FR market share is rather small (5.2%) and in 2008 decreased by 14.5% in comparison with 2007. The Commission thus considers that the aid in question is capable of affecting competition and intra-Union trade.” (par. 79-81 of the letter from the EC to Latvia - Brussels, 15/06/2011 C (2011) 3052 final)
According to the Commission, the notified measure relating to financing of the project Development of infrastructure on Krievu Sala for relocation of port activities out of the city centre is compatible with the internal market under Article 107(3)(c) TFEU.
A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.
Any Evidence-Based Deliberation:
|Is there anything in the public record to suggest that evidence of the effectiveness of the proposed measure was considered during official deliberations?|
|Is there any evidence that alternatives to the proposed measure were considered?|
|Is there anything in the public record that suggests that empirical evidence informed the comparison across the alternatives available to government?|
|Was such evidence identified?|
|Is such evidence publicly available?|
|Did the official decision-maker in question provide an explanation as to why a chosen measure was favoured over alternatives?|
|Is there any evidence to suggest that potentially affected trading partners were consulted before the measures were taken?|
|Is there any evidence that safeguards have been put in place to ensure that implementation of the initiative is transparent and non-discriminatory?|
|Did the government state its intention to review the measure within one year of implementation?|
Date of inception: 1 Jan 2010
Duration: 72 months
GTA Evaluation: Red
the letter from the EC to Latvia - Brussels, 15/06/2011 C (2011) 3052 final. Available from : < http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=... >