On 21 September 2015, George Osborne announced during a visit to China that the UK will provide a £2 billion guarantee to encourage Chinese investors to commit to a deal to build Hinkley Point C (HPC) nuclear power station. It has been reported that the guarantee will be provided by the UK Government’s Infrastructure UK Scheme. Mr Osborne hopes that Xi Jinping, the Chinese president, will finally sanction the commercial terms of the HPC deal on behalf of EDF’s Chinese backers when he visits the UK next month.
This new guarantee seems to be in addition to the existing state aids for HPC approved by the European Commission in October 2014. This is significant as the Commission’s decision (the decision) approving the existing state aid package for HPC contains a caveat: “if the final financing documents contain further State aid elements then, rebus stantibus, they cannot be approved since the present package of State measures represents all the aid that is necessary to allow the HPC investment project to be undertaken.” Whilst no doubt designed to provide a further commercial incentive for hitherto uncommitted investors, the new guarantee may in fact create additional legal obstacles for HPC’s ongoing state aid approval process. Austria, Luxembourg and a group of German and Austrian energy companies are currently attempting to annul the decision.
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