Hurtigruten ‘received illegal state aid’ / News / The Foreigner

Hurtigruten ‘received illegal state aid’. The European Free Trade Association Surveillance Authority (ESA) has declared that state support of Norway’s Hurtigruten breached EFTA rules. Hurtigruten has operated a government-contracted route between Bergen and Kirkenes since 2004. The government agreed to increase its payments after the company reported that its costs had risen, and fewer ships were working the route as a result. Crucially, these extra payments were negotiated without a new contract and without a clear allocation of costs. ESA opened an investigation in July 2010 when it discovered that Hurtigruten had received 75 million kroner more than the original terms of the contract allowed.

hurtigrutenstateaid, eftasurveillanceauthorityinvestigation, magnhildmeltveitkleppa



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Hurtigruten ‘received illegal state aid’

Published on Friday, 1st July, 2011 at 09:27 under the news category, by Gareth Corfield.

The European Free Trade Association Surveillance Authority (ESA) has declared that state support of Norway’s Hurtigruten breached EFTA rules.

MS Nordnorge
MS Nordnorge
Photo: Stefan Wurschinger/Flickr


Hurtigruten has operated a government-contracted route between Bergen and Kirkenes since 2004. The government agreed to increase its payments after the company reported that its costs had risen, and fewer ships were working the route as a result.

Crucially, these extra payments were negotiated without a new contract and without a clear allocation of costs. ESA opened an investigation in July 2010 when it discovered that Hurtigruten had received 75 million kroner more than the original terms of the contract allowed.

“There would have been no Hurtigruten today if we had not reached this additional agreement with the government. The agreement was crucial for us in gaining confidence from the banks and owners to be able to continue. It has also been decisive that we have managed to complete our turnaround operation,” Hurtigruten’s chief executive Olav Fjell told NTB.

The European regulator has said that it is up to the government to calculate the extra sum and recover it from Hurtigruten.

“EEA law does not prohibit member states paying for this kind of services, buttransparency is needed to ensure that public money intended for public services does not subsidise commercial activities, or generate unreasonable profit,” said Per Andreas Bjørgan, director of the Authority's State Aid department.

Yet Hurtigruten’s CEO disputes ESA’s findings, claiming that the additional funding was legitimately discussed.

“We have recorded 320 million as income as a result of the additional agreement, but we have no idea what parts of this agreement are problematic for ESA,” said Olav Fjell. “But we received 130 million of this amount.”

Naturally, Fjell is worried that being forced to refund such a large amount will have severe consequences for Hurtigruten’s finances. Share prices in the company have already dipped 5% after the ESA announced its decision.

In a display of unity, the government is firmly on the side of Hurtigruten. Transport Minister Magnhild Meltveit maintains that the agreement was necessary, also indicating that she may consider legal action to overturn the ESA’s decision.

“We are not familiar with ESA’s assessment or what they believe is illegal state aid … We need to look at it and then consider whether there are grounds to appeal the decision before the courts. Hurtigruten ASA will, on its own initiative, make a similar assessment,” she told Nationen on Wednesday afternoon.

Despite a dip in share prices on Wednesday, Hurtigruten’s share price is still about 8.55% higher than last month because of the great interest caused by NRK’s live broadcast of an entire Hurtigruten cruise.




Published on Friday, 1st July, 2011 at 09:27 under the news category, by Gareth Corfield.

This post has the following tags: hurtigrutenstateaid, eftasurveillanceauthorityinvestigation, magnhildmeltveitkleppa.





  
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