STATE AID NEWS: EU Commission gives green light for public funding for five ferry connections


On 12 July, 2018, the European Commission has found Croatian plans to grant HRK 250 million (€34 million) out of public funds to ensure regular ferry connections on five routes between Croatian islands and the mainland for the purpose of connectivity and development of the islands, to be in line with EU State Aid regulations and deemed not to distort competition within the Single Market.

The Commission has approved under EU State aid rules Croatia’s plan to grant public service compensation for the operation of five ferry routes serving passengers and vehicles between Preko on the Island of Ugljan, the Island of Ošljak and Zadar/Gaženica on the mainland, Tkon on the Island of Pašman and Biograd on the mainland, Sućuraj  on the Island of Hvar and Drvenik on the mainland, and Stari Grad on the Island of Hvar and Split on the mainland.

The public service compensation will be granted to maritime companies which will be selected through public tenders organised by the Agency for Coastal Lines and Maritime Traffic (Agencija za obalni linijski pomorski promet), which will cover the difference between revenues from ferry tickets and the cost of operating the ferries regularly so as to allow the islands’ inhabitants to commute daily to work or study, as well as to transport vehicles and supplies to and from the islands. The aid has been found to be necessary to ensure operation of the routes with adequate frequencies over the whole year, since ticket revenues exceed the cost of the ferry operations only during the summer peak season.

EU Commissioner Margrethe Vestager, responsible for competition policy, is quoted to have said: “For citizens living on Croatian islands, a connection to the mainland is essential. So I’m happy that we are approving public support for ferry connections ensuring the link between five Croatian islands and the rest of Croatia not only during the peak tourist season in the summer, but throughout the year.”

The Commission assessed the measures under EU State aid rules on services of general economic interest (SGEI) and EU rules on maritime cabotage.

EU State Aid rules allow Member States to grant aid in the form of SGEI compensation for maritime links to islands aimed at ensuring territorial continuity and improving the living standard of the islands’ inhabitants.

State aid for maritime links to islands with average annual traffics above 300 000 passengers must be notified to the Commission, prior to their implementation, for an assessment of their compatibility under the SGEI Framework. The Commission verifies, among other criteria, that the aid is granted to a service meeting a real public need which could not be delivered by market forces without this aid. Moreover, the Commission assesses whether the parameters for compensation are set out in advance, the aid is limited to the minimum necessary and the service provider is selected in line with public procurement rules.