December 16 (SeeNews) - The European Commission said on Wednesday that insolvent Bulgarian steel mill Kremikovtzi has failed to implement a business plan for its restructuring aimed to make it competitive and help it survive without further state support.
The steel mill received about 222 million euro ($322.8 million) restructuring state aid between 1998 and 2005, but failed to modernise its infrastructure and to reduce its production costs. The company went bankrupt in August 2008 and Bulgaria initiated the recovery of the aid plus interest in the context of the ongoing liquidation proceedings, the European Commission said in a statement.
"Commission has now concluded that Kremikovtzi failed to implement the business plan in a satisfactory way. Indeed, essential modernisation and environmental investments originally foreseen were not carried out.
Restructuring aid for ailing steel producers is strictly prohibited within the EU. However, in the context of pre-accession, candidate countries may be given the opportunity to grant aid in order to restructure their steel industries once, before having to comply with the EU's regime for state aid to steelmakers. Bulgaria, which joined the EU in 2007, decided in 2004 to support the plant with the restructuring aid.
Kremikovtzi was due to set up a business plan which would bring the company back to viability by 2006, but at the end of 2006, the company had implemented only part of the plan and was still in a poor condition, the Commission said.
($ = 0.6877 euro)