The Association of Romanian Businessmen (AOAR), representing companies with Romanian capital that carry out production activities, brings to the attention of public opinion the defective way of managing state aid, which leads to the loss of confidence in the ability of ministries to manage funds from public money, according to a press release.
By Government Decision no. 959/2022, a state aid scheme was established regarding the allocation of grants for investments intended for the manufacturing industry, a call for projects launched by the Ministry of Economy.
In the call, which closed on 16.12.2022, a number of 81 projects were submitted, of which 21 obtained the maximum score of 100 points.
The applicant’s guide expressly provided for the presentation of a business plan that “must highlight the economic efficiency of the enterprise and the viability of the investment for which financial support is requested.”
In order to distinguish between the 21 companies that obtained the maximum score, only the criterion of profitability of the turnover was taken into account, without being considered in the context of the analysis the “viability of the investment”, i.e. the ability to absorb and use the aid state by the qualified companies.
“This led, in the opinion of the AOAR, to the appearance of absurd situations, based on the published information, which discredits the evaluation process. For example: one of the companies that will receive state aid has a turnover of 5,100 RON, with a profit of 541 RON and will receive state aid to make a “viable investment” in production with a value between 26-45 million euro,” AOAR officials say.
”About 6 of the 8 winning companies have a turnover below 600,000 ron, and the average turnover of all winners is of 1,108,582 ron (approx. 220,000 euros). Each of these companies is to receive state aid and make “viable investments” of 30,000,000 euro each (average value). The total (cumulative) number of employees of the 8 winning companies is 14, returning to an average of 1.75 employees/winning company, and the average profitability for the 8 winning companies is of 67.2% (reaching over 90%, according to the data published on the website of the Ministry of Economy), well above the profitability of companies with production activity (which have, on average, between 5.2% and 17%).”
The consultation of the data by those who made the selection of the 21 companies would have represented a mandatory condition and would have avoided the elimination of companies with real activities in the processing industry by “apartment companies”.
“It requires a minimum level of discernment to realize that such companies win the tender, but do not have the experience and resources to make large-scale investments, nor the capacity to absorb and implement state aid up to 200 times higher than their turnover.
Most likely, they are used to mask the economic interests of other entities that do not want to appear publicly and/or that would not have qualified and will change their ownership in the following periods (through capital increases, convertible loans made directly or indirectly, etc.).
In other words, state aid becomes tradable between economic agents through vehicles used specifically for such auctions,” AOAR officials add.
The list of accepted companies includes companies with 0-7 employees and turnover figures for 2021 of 5,100 lei (one company), 265,000 – 630,000 lei (5 companies) and 2.1 million lei – 4.6 million lei (2 companies), while the list of losers includes Chimcomplex (2.24 billion lei, 1,919 employees), Danlin (220 million lei, 303 employees), Zarea (140 million lei, 200 employees), Promateris (166 million lei, 131 employees), Lemacons (107 million lei, 281 employees) or Swisspor (55 million lei, 60 employees).
“By ignoring the analysis of the business plan and the “viability of the investment” by those who did the selection, the foundations are laid for a “secondary market” on which companies used for the purpose of winning tenders for state aid will be traded. They make unfair competition to companies with actual activity in the manufacturing industry and which have applied for these state aids. The procedure for distributing state aid based strictly on profitability, broken from the context of the viability analysis, creates an unprecedented, flawed situation that lacks transparency and economic reason.
Deficient management of state aid will lead to a loss of confidence in the ministries’ ability to manage funds from public money,” add AOAR representatives.
“Compared to the above, it is necessary to correct the method of selecting the 21 companies, taking into account, in accordance with the Applicant’s Guide, the viability of the investment plan and the plausibility of the effective absorption of state aid by the applicants.
We also request that all companies that have achieved the maximum score of 100 points and have a history of activity and turnover compatible with the level of state aid requested, to be considered for financing.
The Ministry of Economy has an approved budget allocation for supplementing the funds related to the state aid according to HG 959/2022, and the companies in question have already made important expenses and mobilized resources for the successful participation in the call for projects.
We note that companies such as Chimcomplex, Promateris, Zarea, etc., which are established as regional leaders in their field of production, were not selected, not having the chance to have the profitability indicator at the level of apartment companies,” the AOAR press release also states.
