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Commission authorizes German support for the coal industry

The European Commission has published its common Decision, of 2 December 1998, on German aid to the coal industry for 1998. This gives Germany authorization to take certain financial measures to support its coal industry, and is a move of some significance to the energy sector...

The European Commission has published its common Decision, of 2 December 1998, on German aid to the coal industry for 1998. This gives Germany authorization to take certain financial measures to support its coal industry, and is a move of some significance to the energy sector. In October 1997, Germany announced to the European Commission that it wanted to assist its own coal industry in 1998. This required amendments to the country's existing coal policy to 2000, which had previously been set out in Germany's 1994 restructuring plan. The Commission looked at the plan's compatibility with modernization, rationalization and restructuring and various financial measures for aid. In 1997, an agreement was reached on new guidelines for the German coal industry from 1998 to 2005. The agreement provides for a continuing reduction in annual production to 37 million tonnes of coal equivalent in 2002 and a reduction of 30,000 in the workforce to a total of 56,000. This changes earlier targets in the 1994 restructuring plan. Germany based its plan for modernization, rationalization, restructuring and the reduction of mining on the following objectives: - Optimum use of the lower financial resources; - Reduction of production and costs; - Ensuring supplies to customers of appropriate quality and in good time; - A socially acceptable reduction in staff avoiding laying off for operational reasons; - Consideration of the regional impact of measures. Each of the coal production units that were candidates for aid were required to submit information to the Commission, so that the Commission could assess Germany's plans to implement these objectives. The Commission was most interested in the following criteria: - Extent of the deposits; - Coal quality; - Costs. The Commission also took into account the need to minimize the social and regional impact of restructuring coal mining in regions already affected by above average structural unemployment. Germany now has the Commission's permission to grant the following sums to its coal industry: - DM 5171 million: To even the difference between coal-production costs and the sales price freely agreed on the basis of world-market conditions for coal of similar quality from third countries; - DM 3164 million: As part of a programme for the complete or partial closure of a number of German coal mines; - DM 81 million: to cover extra payments to German miners; - Further aid will also be given to cover additional drainage costs in mines closed down as part of restructuring and near to working pits, and to assist the undertakings of certain coal-production units to cover exceptional costs. Aid will also be awarded to certain coal-production units to cover any costs arising from the restructuring of the coal industry, but not related to production. A total of DM 1011 million will be available to cover these costs. The Commission has stipulated that this aid is only to be paid for the production of coal which is supplied for electricity generation and to the European Iron and Steel community (ECSC). Germany has given its assurance that, if the objective of a realistic downward trend cannot be achieved, it will propose the necessary corrective measures to the Commission The coal-mining areas to receive this aid are also target areas for Community regional support.