Up to 25% stake in Tata Steel will meet European Union rules: UK
Resource from: Financial Express Likes:160
Apr 25,2016
The UK government's plans to offer a support package to save Tata Steel's UK operations will meet European Union (EU) rules on state aid, Business Secretary Sajid Javid said today, insisting any deal would not be a bailout or nationalisation.
Javid had last week pledged to take a stake of up to 25 per cent in Tata Steel’s Port Talbot steelworks in south Wales, as well as to inject up to 1 billion pounds of taxpayer loans, in an effort to attract a buyer.
Dismissing talk of part-nationalisation which may fall foul of EU rules, Javid told ‘The Sunday Times’ in an interview: “It will all be compatible with state aid… government can provide financing as long as it’s on commercial terms.
“I don’t envisage having to apply for any exemption or approval from state aid. Whatever we’ve got in mind is compliant. It’s not a bailout; it’s not nationalisation. Working within that framework we can see success at the end of the road.”
“In situations like these nationalisation is rarely the answer. The British steel industry would be in much worse shape had it not been privatised in the first place,” said Javid, who had rushed to Mumbai earlier this month to talk to Tata Steel officials to find a way out of the crisis and save up to 10,000 jobs in the steel sector.
The newspaper quoted sources to say the government’s decision to back Port Talbot was taken by British Prime Minister David Cameron with an eye on the in-out European Union referendum.
It is believed that Cameron may be gambling that the European Commission may allow its bending of state aid rules if it helps to keep Britain within the union.
But Javid insisted: “This has got nothing to do with June 23. I don’t think the referendum changes things one way or the other.”
The fate of Britain’s steel industry has become a hugely significant and divisive issue, on which 15,000 jobs and 25,000 in the wider supply chain hang.
Javid said: “There’s every reason to think that steel can be a viable business in Europe for commercial operators. It’s an important industry economically. I wouldn’t want to think that one day Britain becomes a country that has to import all its steel.
“For any economy the size of Britain, given our manufacturing base, given aerospace and automotive, these are industries that, one way or the other, rely on steel.”
The Tata Group had announced last month that it would quit Britain’s steel industry entirely, putting the Port Talbot steelworks up for sale as well as its vast Scunthorpe plant, which has since been acquired by Greybull Capital.
The exit appeared to catch Javid unaware as he was in Australia with his daughter at the time on an official trip.
Javid claimed his intervention persuaded the Indian conglomerate to grant Port Talbot a stay of execution.
“A few months back they contacted us. They were considering closing Port Talbot and mixing the rest of their downstream business in with their other businesses in Europe. That clearly alarmed us and we managed to persuade them that it’s not in anyone’s interest if you just close this hugely important part of your business.
“If you believe it’s not profitable for you… it might fit in with someone else’s business,” Javid told the newspaper.
(Financial Express)
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