No bailout for Aldel

Minister Kamp from Economic Affairs has made it clear he will not be able to carry out the plan some Groningen businesses came up with to bail out the bankrupt Aldel, due to strict European regulations.

Entrepreneurs from the Eemsdelta region and the Groningen province asked for subsidies of 40-50 million euros annually in a rescue plan, to start up the power plant "Delesto" in the chemical plant in Delfzijl again.

Delfzijl_Watertoren_Aldel
Willemjans
Wikimedia commons

Delesto would provide cheap power to energy-consuming companies in the region, to improve their economic situation in terms of competition. Starting 2016, Aldel would then be able to make the switch to the power cable from Germany, that has yet to be installed.

Minister Kamp thinks the European Commission will see the plan as unauthorized support from the state. 'The Minister is right when he states he can't just invest in an ailing company,' says Willemien den Ouden, Professor of Constitutional and Administrative Law at Leiden University with expertise in the field of State aid law. She goes on to say: 'the European Commission will see the aid as unfair competition and it will only be approved in exceptional cases. In a healthy market situation it's only natural that companies that don't function properly disappear.'

'The European rules for financial aid for companies in need are very strict and detailed,' said Den Ouden. Government aid is only allowed when there's a rescue plan, when other EU-countries are not negatively affected, and when the support is for a short term. In addition, if the Commission is asked for approval of a rescue plan, the company involved may not receive any aid pending the decision, according to the Professor.

The financial aid needed in this case is significant. 'And even with financial aid companies still regularly go bankrupt,' said Den Ouden.