Mr. Nikos Dendias Minister of Foreign Affairs 1St Vas. Sofias Av. 106 71 Athens, Greece
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EUROPEAN COMMISSION Brussels, 18.01.2021 C(2021) 170 final In the published version of this decision, PUBLIC VERSION some information has been omitted, pursuant to articles 30 and 31 of Council This document is made available for Regulation (EU) 2015/1589 of 13 July 2015 information purposes only. laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union, concerning non-disclosure of information covered by professional secrecy. The omissions are shown thus […] Subject: State Aid SA.54273 (2019/N) and SA.58386 (2020/FC) – Greece E65 Motorway concession – Trikala-Egnatia (North section) Excellency, 1. PROCEDURE (1) On 6 February 2019, Greece pre-notified to the Commission investment aid, for the construction of the North section of the E65 Motorway, and operating aid, for the operation and maintenance of the same motorway section. The Commission registered this pre-notification under the case number SA.53438 (2019/PN). On 12 February 2019, a meeting took place between the Commission services and the Greek authorities. (2) On 2 May 2019, the Greek authorities notified to the Commission aid in favour of Odos Kentrikis Elladas S.A. (“Kentriki Odos S.A.” or “the concessionaire”) for the construction, operation and maintenance of the Trikala-Egnatia section (“the North section”) of the E65 Motorway. (3) On 26 June 2019, after an initial examination, the Commission services sent a first request for information, to which the Greek authorities replied, after obtaining an extension of the deadline, with letters of 27 August 2019 and 13 September 2019. As the reply was incomplete, the Commission services asked for the remainder of the requested information by letter of 25 September 2019. The Greek authorities replied, partly on 7 October 2019, and, after another extension of the deadline, partly by letter of 29 November 2019. Mr. Nikos Dendias Minister of Foreign Affairs 1st Vas. Sofias Av. 106 71 Athens, Greece Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel. +32 22991111 (4) On 28 January 2020, the Commission services sent a second request for information. The Greek authorities replied to the request, after obtaining an extension of the deadline, on 31 March 2020, 2 April 2020 and 3 April 2020 and provided an updated and consolidated version of the notification. (5) By letter of 2 April 2020, the Greek authorities agreed to have the present Decision adopted and notified in the English language. (6) On 13 May 2020, following a technical teleconference on 5 May 2020 with the Greek authorities, the Commission sent a third request for additional information, to which the Greek authorities replied on 18 June 2020. On 26 June 2020, the Greek authorities provided an additional clarification. On 24 July 2020, the Commission sent a fourth request for information, to which the Greek authorities replied on 1 September 2020. (7) On 12 August 2020, the privately-owned, Greece-based construction company Proodeftiki S.A. (“the complainant”), lodged a complaint with the Commission alleging that the concessionaire would be granted incompatible State aid through the notified aid for the construction, operation and maintenance of the North section of the E65 Motorway. The complaint was registered under the case number SA.58386 (2020/FC). On 30 September 2020, the Commission forwarded the complaint to the Greek authorities along with a request for information regarding the aspects of the notification in the light of the complainant’s allegations, to which the Greek authorities replied, after obtaining an extension of the deadline, on 17 November 2020. 2. DETAILED DESCRIPTION 2.1. The E65 Motorway project and the beneficiary (8) The Greek section of the pan-European motorway is built and managed by way of a concession for 30 years ("E65 Motorway project"). It concerns: a) the design, construction, operation, maintenance and commercial exploitation of a 181.5 km motorway linking the existing Athens-Thessaloniki motorway (PATHE) with Egnatia Odos in the north of Greece. This motorway is divided in the following sections: (i) section from Lamia (PATHE semi-interchange) to Xyniada I/C, of a length of 32.5 km (“South section”), (ii) section from Xyniada I/C to Trikala I/C, of a total length of 78.5 km (“Middle section”), (iii) section from Trikala I/C to Egnatia I/C, of a total length of 70.5 km, the North section. b) the operation, maintenance and commercial exploitation of a section of the Athens–Thessaloniki motorway, between Skarfia and Raches (57 km), that had already been constructed by the Greek State. (9) The E65 Motorway is included in the Trans-European Transport Network (TEN-T)1. The works on the E65 Motorway are to improve traffic speed, 1 Regulation (EU) No 1315/2013 of the European Parliament and of the Council of 11 December 2013 on Union guidelines for the development of the trans-European transport network and repealing Decision No 661/2010/EU, OJ L 348, 20.12.2013, p. 1. 2 capacity, safety, as well as interconnection with other modes of transport and other EU Member States, both for passengers and cargo. In particular, the E65 Motorway will connect parts of the Greek Thessalia (“Thessaly”) region with the two main motorway axes in Greece, and subsequently with Athens (the capital and major hub for sea, air and railway transport) and Thessaloniki (regional capital and sea, air and railway transport hub). (10) The E65 Motorway project is carried out by a special purpose vehicle company, Kentriki Odos S.A. whose shareholding structure has changed2 since the start of the concession as follows. a) Initial shareholders of the concessionaire (2007 to 7 February 2017): • 33.34% Cintra Concesiones de Infraestructuras de Transporte S.A. (subsequently Ferrovial S.A. following a corporate group restructuring) • 33.33% GEK Holding Real Estate, Construction S.A. (subsequently GEK TERNA Holding Real Estate, Construction S.A. following a corporate group restructuring (“GEK TERNA S.A.”) • 32% Dragados S.A. • 1.33% Iridium Concesiones de Infraestructuras S.A. b) On 7 February 2017, Iridium Concesiones de Infraestructuras S.A. acquired all the shares previously owned by Dragados S.A. Consequently, the structure from 7 February 2017 to 23 October 2017 was: • 33.34% Ferrovial S.A. • 33.33% GEK TERNA S.A. • 33.33% Iridium Concesiones de Infraestructuras S.A. c) On 23 October 2017, GEK TERNA S.A. acquired all the shares previously owned by Iridium Concesiones de Infraestructuras S.A. Consequently, the structure from 23 October 2017 to 11 December 2018 was: • 33.34% Ferrovial S.A. • 66.66% GEK TERNA S.A. d) On 11 December 2018, GEK TERNA S.A. acquired all the shares previously owned by Ferrovial S.A. Consequently, the structure from 11 December 2018 to 20 October 2020 was: • 100% GEK TERNA S.A. e) On 20 October 2020, GEK TERNA S.A. transferred all its shares of the concessionaire, to its wholly owned subsidiary GEK TERNA MOTORWAYS SINGLE MEMBER S.A. Consequently, the sole shareholder of the concessionaire is: • 100% GEK TERNA MOTORWAYS SINGLE MEMBER S.A. 2.2. The 2007 concession agreement (11) In 2007, following a competitive tender (“2007 tender”), the Greek State and the concessionaire signed a concession agreement for the construction, operation and maintenance of the entire E65 Motorway (the “CA”). Under the CA, the concessionaire would construct, operate and maintain the motorway, while the ownership of the motorway would lie with the Greek State. The concession 2 Following transfer of shares, permitted under the concession agreement and approved by Greece. 3 commenced on 31 March 2008, and was initially envisaged to have a duration of 30 years, thus ending on 31 March 2038. (12) The construction of the E65 Motorway was envisaged to be financed partly by private sources and partly by public sources. This was based on the premise that, in view of the negative financial net present value (“NPV”), the E65 Motorway could not be constructed unless financed, in part, with public funds. The public sources envisaged at the time were as follows: a) a grant of EUR 518 million from the State, which included national and EU funding and b) toll revenues from the existing motorway section (i.e. the Skarfia-Raches section), constructed by the State. (13) The private sources were envisaged to be: a) EUR 155 million from the concessionaire in the form of equity, including shareholders’ loans and b) EUR 1 190 million from commercial loans, issued by a group of Greek and international financial institutions. The commercial loans would be progressively drawn down during the construction period (T1), and would be repaid during the operation period (T2). (14) As regards its operation and maintenance, the E65 Motorway was considered from conception as requiring an ongoing State subsidy throughout its term. This subsidy was intended to cover the difference between the anticipated traffic revenues, and the actual costs of the operation, maintenance and financing of the motorway, including a return to the investors. Therefore, the E65 Motorway concession was tendered on the basis of the availability of a subsidy payment, the maximum amount of which was determined on the basis of the first tenderers’ offer. (15) The State support in favour of the E65 Motorway was the subject of a Commission decision, which found that there was no State aid in favour of the concessionaire3. 2.3. The 2013 Reset agreement and the 2013 Commission no objection Decision (16) In the years that followed the conclusion of the CA, due to the economic crisis, there was a steep decline in traffic throughout Greece, and therefore also in the expected toll income for the concessionaire (at least 60% lower than predicted).