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Sep 26, 2007 14:45 EEST
September 26 (SeeNews) - The European Commission said on Wednesday it has opened a formal investigation if Romania had granted state aid of up to 26 million euro ($37 million) to local steel pipe manufacturer Mittal Steel Roman, part of steel giant Arcelor Mittal.
“In particular, the investigation will look at the fact that several public authorities agreed to waive and reschedule part of their outstanding debts in the context of the privatisation of the company in 2003,” the Commission said in a statement.
Mittal Steel bought Mittal Steel Roman, formerly Petrotub, in 2003. Arcelor Mittal steel group was set up last year when Arcelor merged with Mittal Steel.
In the course of the company's privatisation several public authorities agreed to waive outstanding debts of around 25 million euro and to reschedule debts of 520,000 euro. These waivers and rescheduling potentially constitute state aid.
The opening of a formal investigation gives interested parties an opportunity to comment on the measures under assessment, the Commission said adding, "It does not prejudge the outcome of the procedure."
The Romanian authorities argue that the privatisation, including the waivers and debt rescheduling, was economically more advantageous for the state than the liquidation of the company. They maintain that when waiving and rescheduling the debts, the state had acted as a market economy operator, trying to achieve the economically best result.
If this was the case, the waivers and debt rescheduling would not constitute state aid, the Commission said.
Petrotub was privatised before Romania joined the EU in January 2007, but the country's accession treaty contains specific provisions which enable the Commisison to control aid granted for the restructuring of the steel industry.
Mittal Steel Roman reported a first-half net profit of 28.6 million lei ($12 million/8.4 million euro), down from 30.9 million lei a year earlier.
Arcelor Mittal group owns another three steel plants in Romania: Mittal Steel Galati, Mittal Steel Iasi and Mittal Steel Hunedoara.
($ = 0.7081 euro)
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