On June 5, 2020, the State Aid Control Commission illegally approved state aid to Shandong Linglong Tires for the construction of a tire factory in Zrenjanin in the amount of 83,490,605 euro, the Regulatory Institute for Renewable Energy and Environment (RERI) claims on its website.
RERI says that Linglong and the Ministry of Economy did not report to the Commission the entire state aid approved to the company. They add that the Commission has failed to determine the indirect aid that the company received from the state budget.
According to RERI, the state aid granted to Linglong consists of two components: allocated funds in the amount of 75,823,900 euro (granted by the Ministry of Economy) and 95 hectares of land owned by the Zrenjanin government worth 7,666,705 euro.
Agreement on the alienation of publicly owned land was signed in March 2019, which allocated just over 95 hectares of land by direct agreement, without compensation, to Linglong. The contract was signed by the company’s directors and the Directorate for Real Estate of the Republic of Serbia.
“The Law on State Aid Control states that such aid cannot be granted before the Commission passes a decree assessing its compliance with the rules on state aid control. It’s not clear how this issue was on the Commission’s agenda just over a year after the contract was signed. Also, neither Linglong nor the Ministry of Economy reported all the aid received from the State, namely the aid granted through long-term exemption from paying income tax and duty-free imports, subsidies for the development of building land and indirect State aid, received by Linglong, that is supposed to be used by constructing infrastructure, which all came from taxpayers money,” RERI warns.
Taking into account the present net value of the investment, estimated by Linglong to be 645 million euro, including aid and the expected internal profit rate of 34% for the investment period of 8 years, the total aid that the same factory received from the Republic of Serbia certainly exceeds the threshold of aid allowed for large investment projects.
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