Switzerland approves state aid to the steel sector

Four enterprises will be exempted from part of the electricity grid usage fee for 4 years

1. Swiss lawmakers have instructed the government to provide assistance to the country’s steel industry, Arcinfo informs.

Parliamentarians voted to amend the Law on Electricity Supply. They stipulate that foundries of strategic importance will receive financial assistance under certain conditions. They will be exempted from part of the fee for using the power grid for four years.

The beneficiaries of this decision are the metallurgical enterprises Stahl Gerlafingen (AFV Acciaierie Beltrame SpA) and Steeltec (Swiss Steel), as well as the aluminum plants of the canton of Valais Constellium and Novelis.

Given the strong reservations about state aid to a specific industry, the project is subject to strict conditions. The maintenance of the enterprise in Switzerland must be supported by a business plan, and no dividends or special and variable remuneration is expected to be distributed.

Network fees can be reduced only if the canton in which the company is based makes a contribution to the assistance provided to companies in need. This contribution must be at least half of the amount of the reduction.

The fees can be reduced by 50% in the first year, 37.5% in the second year, 25% in the third year and 12.5% in the fourth year. The law will come into force next year and will remain in effect until December 31, 2028. The National Council (the lower house of parliament) voted in favor of the amended bill on December 17.

According to Bloomberg, the government and its economic advisory agency opposed any intervention. Thus, lawmakers broke the traditional approach to business in the country.

The dispute erupted after Swiss Steel Group announced that it would cut hundreds of jobs. Stahl Gerlafingen announced earlier this year that it would close a production line. It then suspended the move as the prospect of a bailout arose.

As GMK Center reported earlier, in April it was reported that the Swiss steel industry is facing a serious crisis and significant financial problems. This was discussed in the RTS investigation. Despite the recognition of the importance of the industry, the authorities did not consider it appropriate to financially support it.