Commission Approves €2B Italian Guarantee for Reinsurance of NG Trade Credit Risk

Source: www.gulfoilandgas.com 10/3/2022, Location: Europe

The European Commission has approved, under EU State aid rules, a €2 billion Italian scheme for the reinsurance of natural gas and electricity trade credit risk in the context of Russia's war against Ukraine.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “This €2 billion Italian scheme will contribute to ensuring that trade credit insurance remains available to companies for securing their commercial exchanges. This will help them address their liquidity needs and continue their activities in the context of the current geopolitical crisis and the consequent increase of the costs of electricity and natural gas. We continue to stand with Ukraine and its people. At the same time, we continue working closely with Member States to ensure that national support measures can be put in place in a timely, coordinated and effective way, while protecting the level playing field in the Single Market.”

The Italian support measure

Italy notified to the Commission a State guarantee scheme for the reinsurance of natural gas and electricity trade credit risks to support companies affected by the current geopolitical crisis and the consequent increase of the costs of electricity and natural gas. The scheme will be administered by SACE, the Italian Export Credit Agency. In particular, SACE will sign reinsurance agreements with insurers covering the natural gas and electricity trade credit risks, while SACE will receive a counter-guarantee from the Italian State to cover its risks.

In light of the economic impact of the current crisis, the Italian scheme, with an estimated budget of €2 billion, aims at limiting the risks insurers are currently facing by offering trade credit insurance to customers. This measure will also make it easier for these customers to obtain a postponement of payment of their energy bills by up to 24 months, based on an agreement with their energy supplier. At the same time, it will ensure that trade credit insurance continues to be available to companies, avoiding the need for them to pay their energy bills in advance or within a few weeks, thus reducing their immediate liquidity needs.

The Commission assessed the measure under EU State aid rules, and in particular Article 107(3)(b) of the Treaty on the Functioning of the European Union (TFEU), recognising that the EU economy is experiencing a serious disturbance.

The Commission found that the scheme notified by Italy, is compatible with the principles set out in the EU Treaty and is well targeted to remedy a serious disturbance to the Italian economy. In particular, (i) the trade credit insurers have committed to maintain the same level of protection offered on 22 March 2022 and to lower the premiums that customers have to pay for transactions covered by the measure, compared to a situation without the latter; (ii) the guarantee is limited to trade credit originated until the end of this year; (iii) the scheme is open to all credit insurers in Italy; and (iv) the guarantee mechanism ensures risk sharing between the insurers and the State, up to a volume of €2 billion.

The Commission concluded that the scheme will contribute to managing the economic impact of the current crisis in Italy. It is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the general principles set out in the Temporary Crisis Framework, which the Commission has applied by analogy.

On this basis, the Commission approved the measure under EU State aid rules.


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