Wednesday, December 1

Brussels’ doubts about direct aid threaten Spain’s’ megaprojects’ with European funds


The President of the Government, Pedro Sánchez, at the presentation of the automotive PERTE last July.

The President of the Government, Pedro Sánchez, at the presentation of the automotive PERTE last July.

The government last summer approved the first of the megaprojects key strategies to boost key and transformative areas of our economy with European funds like a billion dollar push. It was in mid-July when the Council of Ministers approved the strategic project for economic recovery and transformation (LOSS) of the automotive sector and when President Pedro Sánchez presented it in society at a large event with representatives of the automotive, energy and new technologies industries.

The Government has used Brussels as intermediaries to pressure other institutions and regulators

The LOSS of the electric and connected vehicle aims to mobilize 24 billion of euros in investments and will have almost 4,300 million of public aid from the European injection channeled through the Recovery, Transformation and Resilience Plan. The goal is to create a hub of electromobility with aid and investments throughout the value chain (research, manufacturing, assembly, production of batteries for electric cars, development of the recharging socket network …) and linking it to the connectivity push of 5G and the artificial intelligence. And although the project is not underway, surprisingly the leading participation of Seat, and another fifteen companies such as Iberdrola, Telefónica or CaixaBank.

Known and publicized already the overwhelming figures and four months after the birth of the project was approved, formally no further steps have been taken to execute it. The Government insists that they will approve and publish the order of bases and the announcement of the aid to which companies can apply before the end of the year. But for that, it must first have the placet of the European Commission, which for the moment still does not endorse the formulation of PERTE due to the risk that the billion-dollar public aid it comprises may be contrary to the community regulations on illicit State aid.

Meter prisa to the CE

The Government is trying to pressure the European Commission to clarify once and for all the framework of public aid that can be used in the mammoth projects of the PERTE and that sets the limits for which the subsidies can be distributed without having to go through the Brussels filter and without having to have their formal approval.

“There is a strong open discussion with Europe on the concept and scope of the PERTE. The intention of the Government is to obtain for the PERTE a system of aid as lax as that of the Important Projects of Common European Interest (IPCEI), but it is not achieving for the moment that Brussels will equalize the conditions ”, they point out from one of the large Ibex companies aware of the talks. “The Government made a lot of noise when it approved the automotive PERTE. But now he has found that the European Commission wants aid to pass through its filter. And that can be a very important barrier for large projects ”.

The nerves in the Executive are evident and Brussels is in a hurry to be able to carry out the rest of PERTE that aims to promote Spain and avoid the bottleneck that would mean having to request permission for each subsidy. As confirmed by government sources, the approval of the Commission for the aid of the automotive PERTE is expected to use it as a model for the rest of the strategic projects in the portfolio. “We are trying to accelerate the automotive PERTE to approve more for the end of the year,” acknowledged this week the economic vice president, Nadia Calvin, during his speech at the congress of the Spanish Confederation of Directors and Executives (CEDE) held this week in Córdoba.

The other PERTE

The Government has confirmed its intention to carry out several PERTEs. In addition to the connected vehicle program, Spain has announced a PERTE on the new language economy for boost spanish in science, artificial intelligence and cultural industries, among other areas. The Executive is also studying the aerospace PERTE, that of an intelligent and sustainable agri-food, and that of the push for avant-garde health. And it has also shown interest in driving PERTE of artificial intelligence and green hydrogen.

But all these megaprojects, each one with a different degree of maturity in its design and formulation, are waiting for the European Commission to say yes to the automotive PERTE to serve as a guide to establish public aid for everyone else. Hence the rush of the Spanish Executive and the pressure to achieve some laxity in the distribution of aid. Pressure exerted by the Ministries involved in the approval of the pending PERTEs, and which the Government is also entrusting to other Spanish institutions and regulators in each meeting they hold with representatives of the European Commission.

“The Government initially created the PERTE to be able to give direct subsidies, but the model had to be modified because Europe was not going to allow the aid to be given without calling for tenders. Now the Government is realizing that taking out large projects is very difficult and that is why it negotiates new conditions ”, explain sources from one of the large consulting groups, which are directly advising companies to access European funds. “The reality is that the European Commission is not going to delegate to Spain the power to give State aid. What will happen to the PERTE of the car? Well, it is likely that it will not exist ”.

“What will happen to the PERTE of the car? Well, it is likely that it will not exist”, warns one of the large consulting firms

The difficulties in launching the projects are paradoxically found in the European rules themselves, because the State Aid Framework limits the amount of public resources that can be dedicated to supporting business investments without prior approval from Brussels. The Spanish Government negotiates with Brussels precisely to raise the ceiling of that Framework to facilitate large calls, according to sources familiar with these conversations.

“By capping the investment volume, the Framework is generating incentives for individual beneficiary projects, to the detriment of more powerful initiatives by groupings of companies,” explains Paloma Baena, director of the Next Generation EU Unit at LLyC. “SMEs often depend on the impulse of the largest companies, so it is important to favor joint actions.”

Both the Government and the European Commission confirm permanent contacts to refine the characteristics of the PERTE of the connected vehicle, but without giving more details about the still existing disagreements on the limits of the subsidies so as not to collide with European legislation. The calendar that the Ministry of Industry manages is to approve the call for aid in December, give a deadline until February 2022 for the companies to present their applications and in July proceed to the resolution of the granting of the aid. In July, just one year after its approval by the Council of Ministers. But the calendar can only be met with the ok from Brussels. And without it, the rest of PERTE is still stuck.


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