Minister Franz Fayot; Credit: Chambre des députés

On Tuesday 20 December 2022, Luxembourg's Ministry of the Economy announced a substantial extension of the criteria for obtaining aid for companies affected by the rise in energy prices as well as an extension of the bank loan scheme guaranteed by the State.

The changes follow the modifications by the European Commission to the temporary crisis framework relating to the war in Ukraine; on 29 December 2022, the Chamber of Deputies voted significant changes to the amended law of 15 July 2022 which aims to set up an aid scheme for companies particularly affected by the rise in energy prices. The bill in question was introduced into the legislative procedure by the Minister of the Economy, Franz Fayot.

The first aid from this scheme makes it possible to cover part of the additional costs in natural gas, electricity as well as heating and cooling produced from these energy sources for companies that occurred between January and June 2023. Thus, this aid is extended until mid-2023. In addition, following the amendments adopted by the Chamber of Deputies, this aid is no longer reserved for large energy-consuming companies. However, to benefit from it, companies must have a certain energy intensity, purchases of energy products and electricity must reach at least 1.5% of turnover (or production value of the company). In addition, the intensities and amounts of aid are considerably increased and can reach up to €4 million, or even, in certain cases, €75 million per company. The amounts allocated differ according to the energy intensity and the economic situation of the company.

Another modification concerns companies producing heat or biogas, or companies operating a heating network. A new aid is introduced to offset part of the additional costs in natural gas, electricity and biomass or heat that these companies incur, because they are unable to pass on the price increase to their customers. This aid will make it possible to subsidise the additional costs of these companies which supply households and businesses with heat and biogas between the months of January to June 2023 up to €2 million per group.

During his speech in the Chamber of Deputies, Minister Fayot recalled that the total financial envelope provided for the aid scheme for companies particularly affected by the rise in energy prices is €375 million.

Extension of the state-guaranteed loan scheme for the Luxembourg economy

For the rest, the Chamber of Deputies also adopted the bill which provides that the aid scheme in the form of guarantees in favour of the Luxembourg economy is extended until 31 December 2023. This scheme of bank loans guaranteed by the State aims to meet the liquidity needs of companies established in Luxembourg which are affected by the economic consequences of the Russian military aggression in Ukraine.