COMMISSION IMPLEMENTING DECISION of 18.12.2024 on the reduction of the amount of the second instalment of the loan support for Romania

ried out by the staff of the General Directorate of State Aid and European Financing (DGASFE) within the Ministry of Energy and the technical- economic evaluation of projects was carried out with the support of the experts of the European Investment Bank. […] After completing the administrative and eligibility verification stage and the technical-economic evaluation stage for the first 8 projects, on 27.12.2023 the results of the procedure were communicated to the bidders, 6 projects being accepted (https://energie.gov.ro/wp-content/uploads/2023/09/LISTA- proiecte-propuse-pentru-respingere13.pdf) and two 2 projects were rejected, as follows: […] OMV Petrom SA, ranked first and approved; […] INFRA EXPERT SRL, ranked 2nd and approved; […] SUDAREC ROMSERV SRL, ranked 3 rd and approved; […] CHIMCOMPLEX SA Borzești, ranked 4th and rejected following the verification of administrative compliance and eligibility of the project; […] OMV Petrom SA, ranked 5th and approved; […] Interventii Active in Atmosphere SA, ranked 6th and approved on the reserve list;[…] CHIMCOMPLEX SA Borzești, ranked 7th and rejected following the verification of administrative compliance and project eligibility; […] TEHNOMIR SA, ranked 8th and approved on the reserve list.[…] Considering the above, for the fulfilment of Milestone no. 129, until 31.12.2023, the Ministry of Energy signed four financing contracts […] as follows: 1. Financing contract no. 154/29.12.2023, concluded between the Ministry of Energy and OMV PETROM SA for the project ‘Expansion of green hydrogen production capacity by building a 6kNm3h hydrogen facility through water electrolysis, utilities and site organization’; The total value of the project is 480,443,092.91 lei, including VAT. The total eligible amount is 357,234,478.05 lei, excluding VAT, of which the maximum non-refundable eligible amount (State aid value) is 142,665,500 lei, excluding VAT, 18.12 MW(H2) generated. 2. Financing contract no. 156/29.12.2023, concluded between the Ministry of Energy and INFRA EXPERT SRL for the ‘Hydro - Future’ project; EN 5 EN  The total value of the project is 188,687,840.67 lei, including VAT. The total eligible amount is 180,496,172.44 lei, excluding VAT, of which the maximum non-refundable eligible amount (state aid value) is 180,496,172.44 lei, excluding VAT, 22,846 MW(H2) generated. 3. Financing contract no. 155/29.12.2023 concluded between the Ministry of Energy and SUDAREC ROMSERV SRL, for the ‘H - Horizon Production Plant’ project The total value of the project is 188,795,025.64 lei, including VAT. The total eligible amount is 184,267,248 lei, excluding VAT, of which the maximum non-refundable eligible amount (state aid value) is 139,675,581.19 lei, excluding VAT, 17.31 MW(H2) generated. 4. Financing contract no. 153/29.12.2023 concluded between the Ministry of Energy and OMV PETROM SA for the project ‘Construction of a hydrogen production facility (green) through water electrolysis’ The total value of the project is 324,622,686.20 lei, including VAT. The total eligible amount is 226,890,171.05 lei, excluding VAT, of which the maximum non-refundable eligible amount (state aid value) is 103,309,500 lei, excluding VAT, 12.10 MW(H2) generated. The total installed capacity is 70,374 MW for the 4 contracted projects, which led to the fulfilment of milestone 129.’ Furthermore, as part of its submission of 20 March 2024, Romania also submitted that, following the signature of the four contracts, on 18 March 2024, the Romanian Audit Authority concluded on ‘the non-observance of certain eligibility conditions’ by two successful bidders, raising suspicions of fraud and bid rigging. The Romanian Audit Authority also recommended the termination of those two contracts and the conclusion of new contracts with beneficiaries from the reserve list. Romania further explained that following the findings of the Romanian Audit authority, the Ministry of Energy issued notification of suspicion of fraud no. 232796/DGASFE/14.03.2024. Lastly, Romania indicated that the Ministry of Energy will proceed to terminate the two contracts and that two projects from the reserve list will be contracted, and stated that: ‘[…], in the period 19.02.2024-11.03.2024, the mission of the Audit Authority was carried out at the headquarters of the Ministry of Energy for the evaluation of the way of fulfilling milestones 129 and 133 within the NRRP, taking into account the decision of the European Commission. Regarding the verifications carried out within the audit mission on the method of evaluation, selection and contracting of the projects, the Audit Authority found "the non-fulfilment of certain eligibility conditions provided for in the Specific Guide by the projects ‘H-Orizon Production Plant’, beneficiary SC SUDAREC ROMSERV SRL and ‘Hydro-Future’, beneficiary SC INFRA EXPERT SRL, which led to suspicions of fraud regarding how the financial capacity of the beneficiary INFRA EXPERT SRL is justified. Considering these deficiencies, the Audit Authority recommended the Ministry of Energy, in its capacity as reforms and investments coordinator financed from the NRRP, to take the necessary measures to terminate financing contracts no. 155/29.12.2023 concluded with SUDAREC ROMSERV SRL and no. 156/29.12.2023 concluded with INFRA EXPERT SRL and to continue with speeding up the contracting process of the approved projects from the reserve list. Through address no. 2066/SIB/15.03.2024 […], the Ministry of Energy submitted its point of view on the findings of the Audit Authority, presenting arguments vis-a-vis of EN 6 EN  the provisions of the Applicant’s Guide in the evaluation process and selection and requested the suspension of the aforementioned contracts, until the suspected fraud is resolved. However, through address no. 210190/CP/18.03.2024 […], the Audit Authority maintained its findings issued in the first instance. Following the findings of the Audit Authority, in order to avoid serious irregularities in order to obtain and use non-reimbursable external funds from the NRRP, at the level of the Ministry of Energy as the coordinator of reforms and investments financed from the NRRP, the Notification of suspicion of fraud no. 232796/DGASFE/14.03.2024 was issued. Also, to ensure a minimal impact on the budget of the European Union and Milestone 129, the Ministry of Energy will proceed to terminate the 2 contracts, within a maximum of 10 days after receiving the address 210 180/C.P./11.03.2024. In order to reach the indicator of 60 MWH2, by 30.03.2024, the following 2 projects from the reserve list will be contracted, for which pre-contracting notices were already sent on 15.03.2024. The two projects were submitted by TEHNOMIR and Interventii Active in Atmosfera SA, with installed H2 generation capacity of 12.60 MW and 2.5 MW, respectively. By concluding the two new contracts, an installed capacity of 45.37 MWH2 will be reached, approximately 75 % of the value assumed by the milestone. Equally, Ministry of Energy is currently assessing and taking into consideration the possibility of relaunching the call, in order to completely accomplish Milestone 129 and not affect the full deployment of Milestone 131 in 2025.’ (24) As part of its submission of 10 May 2024, Romania provided new evidence that the two relevant contracts for a total installed capacity of 40.15 MW(H2) had been cancelled and a new contract for a capacity of 2.55 MW(H2) was signed with one of the applicants from the reserve list. In this context, Romania submitted that ‘after the termination of the two contracts with the beneficiaries Infraexpert SRL and SUDAREC ROMSERV, in accordance with the recommendations of the Audit Authority, the Ministry of Energy started the pre-contracting process with the 2 applicants on the reserve list, namely INTERVENTII ACTIVE ÎN ATMOSFERĂ and TEHNOMIR SRL. For the applicant INTERVENTII ACTIVE ÎN ATMOSFERĂ, the financing contract no. 302/12.04.2024 […]. Thus, the 3 contracts signed so far add up to a total installed capacity of 32.77 MW H2 out. For the applicant TEHNOMIR SRL, notified for pre- contracting on 27/03/2024, the account statement/engaging comfort letter is still awaited, a mandatory document to present in the pre-contracting stage.’ (25) As part of its submission of 30 August 2024, Romania provided new evidence that ‘financing contract no 320/19.06.2024 with Tehnomir SRL’, the remaining bidder from the reserve list, had been signed. In this context, Romania submitted that following the evaluation of other bids initially dismissed for lack of budget, ‘8 projects were approved for financing’. Only two financing contracts have been signed with ELEKTRA POWER and Bplus ADVISORY on 29 July 2024 and 14 August 2024, respectively. An extension was granted to a third successful bidder, SAPE, to provide the required documentation, and the financing contract was signed on 6 September 2024. However, the results of the audit conducted by the Audit Authority indicated that ELEKTRA POWER did ‘not fully meet the eligibility conditions set out in the Specific Guide’ and ‘considers that the contract with ELEKTRA POWER SRL is necessary to be terminated’. Romania submitted that the Ministry of Energy notified ELEKTRA POWER SRL about the termination of the contract on 28 August 2024. (26) However, the new evidence and arguments brought forward by Romania do not demonstrate that the contracts signed for the construction of new electrolysers achieved the capacity of at least 60MW H2, with an expected volume generated of at EN 7 EN  least 10 000 tons of renewable hydrogen, in accordance with the requirements of the Council Implementing Decision. (27) With respect to the new evidence and arguments provided by Romania on 20 March 2024 related to the cancellation of the seven contracts for the construction of green hydrogen production capacities, previously concluded and submitted as evidence of completion of milestone 129, the Commission notes that this cancellation aligns with the concerns raised and recommendations made by the Romanian Audit Authority in its audit report of 28 March 2023. The Commission recalls that the deficiencies identified in the selection procedure have led the Commission not to have reasonable assurances that the evidence submitted by Romania duly justified the fulfilment of milestone 129, in accordance with Article 24(2) of Regulation (EU) 2021/241. The Commission considers that these actions, while constructive in nature, do not, as such, directly lead to the satisfactory fulfilment of the requirements of Milestone 129. (28) With respect to the new evidence and arguments provided by Romania on 20 March 2024 related to the re-launch of the call for tenders and signature of new contracts for the construction of electrolysers, the Commission firstly notes that Romania re- launched the call for tenders which resulted in six bids being approved, out of which four contracts were signed on 29 December 2023 for a total installed capacity of 70.37 MW(H2) and two bids were put on a reserve list for a total installed capacity of 11.61 MW(H2). Secondly, the Commission notes that the Romanian Audit Authority found the non-fulfilment of certain eligibility conditions by two successful bidders and recommended the termination of two of the four contracts signed. The Commission deems the cancellation of the two contracts, to be a suitable response to the concerns and recommendations raised by the Romanian Audit Authority on 18 March 2024, and considers that Romania has taken the appropriate measures to protect the financial interests of the Union and to ensure that the use of funds in relation to measures supported by the Recovery and Resilience Facility complies with the applicable Union and national law, in particular regarding the prevention, detection and correction of fraud, corruption and conflicts of interests. (29) With respect to the new evidence and arguments provided by Romania on 10 May 2024 and 30 August 2024 related to signature of contracts for the construction of new electrolyser capacity, the Commission notes that Romania signed two new contracts for a total electrolyser capacity of 2.55 MW(H2) and 9.06 MW(H2) on 12 April 2024 and 19 June 2024, respectively, with two successful bidders from the reserve list established on 23 December 2023. The Commission further notes that, according to Article 24(8) of Regulation (EU) 2021/241, “Where the Member State concerned has not taken the necessary measures within a period of six months from the suspension, the Commission shall reduce the amount of the financial contribution and, where applicable, of the loan proportionately after having given the Member State concerned the possibility to present its observations within two months from the communication of its conclusions”, and that the six month period from the adoption of Implementing Decision of 21 September 2023 on the partial suspension of the disbursement of the second instalment of the loan support for Romania expired on 22 March 2024. Nonetheless, the Commission considers that the signature of the aforementioned contracts constitute measures taken by Romania within the six-month period established by Article 24(8) of Regulation (EU) 2021/241, for the following reasons. First, the Commission considers that the award decision notified by Romania to the six successful bidders confirmed Romania’s commitment to sign the contracts and conferred enforceable rights upon the selected bidders also placed on the reserve list, EN 8 EN  in particular, the right to be awarded a contract if any of the first ranked bidders is unable or unwilling to fulfil their obligations. Second, the Commission takes the view that the pre-contracting notices of 15 March 2024 to the two bidders on the reserve list establishes already a contractual relationship between Romania and the two bidders. Third, the subsequent signature of contracts with the selected applicants placed on the reserve list is considered as an administrative step required to finalise the process, and does not create new contractual obligations. Lastly, the Commission considers that Romania’s actions in response to the Romanian Audit Authority’s recommendations demonstrates the effectiveness and efficiency of Romania’s internal audit and control system. By taking measures to rectify the deficiencies identified by the Romanian Audit Authority, Romania has ensured that the procurement process is conducted in a manner that is compliant with the applicable legal and regulatory requirements. The Commission considers therefore that only four signed contracts 13 for an installed capacity of 41.83 MW(H2) with an expected volume generated of at least 8 300 tons of renewable hydrogen can be considered for the purpose of demonstrating the fulfilment of milestone 129. This, however, still falls short of the targeted capacity of 60 MW(H2), as required by milestone 129. (30) With respect to the new evidence and arguments provided by Romania on 30 August 2024 and 6 September 2024 related to the signature of two contracts for the construction of new electrolyser capacity, the Commission notes that Romania restarted the evaluation process of the remaining bids and signed additional contracts with a total installed capacity of 5.99 MW(H2) and 1.83 MW(H2) on 14 August and 6 September 2024, respectively. The Commission considers that, as opposed to the contracts signed on 12 April and 19 June 2024 with applicants that were already placed on the reserve list before the end of the six-month period established by Article 24(8) of the Regulation (EU) 2021/241, the contr