Energy chief hints at boost for UK coal

Date: 26/10/00

ENERGY chief Loyola de Palacio has dropped strong hints that the European Commission will approve the UK government's plans for a 130-million euro boost to the country's coal industry.

Aides to the Spanish Commissioner say the Union executive will rule next month on the legality of the payment, which is designed to prop up the British industry until depressed world coal prices recover.

They have refused to confirm that that the aid will be approved, but point to huge differences between the UK and Germany, which is under intense pressure from the European Commission to change its own plans to channel 3.5 billion euro to the coal sector.

Officials add that existing Union rules governing aid to the coal industry would, in theory, allow the type of temporary help envisaged by London.

"The situation in the UK is quite different. Until now the UK has not made any state aid payments," said one aide to the Commissioner.

He added that the UK had done more than any other member state to restructure its industry to make it viable in the face of global competition, which would price most unsubsidised EU producers out of the market.

"It is clear that the UK underwent major restructuring in the 1980s. It was not easy but their coal industry became more viable," he explained.

De Palacio has, however, delivered an ultimatum to the Germans, warning that payments to the coal industry should be redirected - with the emphasis on closing uneconomical pits instead of paying to keep them open.

She has warned that Union rules would not allow Berlin to pump 'operating aid' into pits where there is no hope of a long-term reduction in costs.

The Commissioner is now locked in talks with the German government in a bid to avoid the need for legal action over the issue.

Energy chief Loyola de Palacio has dropped strong hints that the European Commission will approve the UK government's plans for a €130-million boost to the country's coal industry.