Brussels clears Polish gas line subsidies

The European Commission (EC) has approved the payment of subsidies worth €758mn to build nine gas pipelines within Poland, boosting local distribution and gas flows across the country to other European Union (EU) member states, writes Keith Nuthall.

This public money will cover 64% of total investment costs in these projects, with funds coming from the European Regional Development Fund’s (ERDF) infrastructure and environment operational programme 2014–2020. Polish transmission system operator Gazociągów Przesyłowych GAZ-System S (GAZ-System) will finance the remaining costs.

The EC had to rule on whether this subsidy complied with EU state aid rules because member states decide how ERDF funds are spent – and Brussels must ensure they do not give companies unfair advantages in the EU market.

Here, the EC decided the subsidies were wise, following EU environmental and energy guidelines. EU Competition Commissioner Margrethe Vestager said: ‘Interconnections enable energy flows between countries, improve cross-border connections and allow diversification of gas supply sources.’

The gas pipelines that will be built between 2016 and 2022 as a result are the Zdzieszowice–Kędzierzyn Koźle–Tworóg pipeline; Szczecin–Gdańsk gas pipeline (stage V Goleniów–Płoty); the Pogórska Wola–Tworzeń line; Tworóg–Tworzeń; Leśniewice–Łódź; Rembelszczyzna–Mory–Wola Karczewska; Wronów-Rembelszczyzna; Wronów–Kozienice; and the Lewin Brzeski–Nysa pipeline.

Five of these projects will connect Poland to foreign gas supply sources from the Baltic, Adriatic and the Black Seas, distributing it to the rest of Europe via a ‘North South Gas interconnection priority corridor’ identified in EU infrastructure development plans.

The others will boost security of supply in Poland by eliminating bottlenecks and providing additional capacity to the existing gas networks, said a Commission note. It cited analysis showing GAZ-System’s expected income from the new pipelines will cover its costs over 25 years. If it had shouldered all the costs, transmission tariffs would have risen 22.34%, ‘which would not have been sustainable’, said the EC.