Cyprus should copy France’s SMEs subsidy

Commissioner for State Aid Control Stella Michaelidou suggested Cyprus could adopt the French subsidy scheme for small and medium-sized enterprises (SMEs) impacted by the Ukraine war the European Commission approved.

In her announcement, the Commissioner argued that France, in efforts to support very small, small, and medium-sized enterprises, has formally submitted a budgetary plan of €3.5 bln to Brussels, citing the impact of the Ukrainian war as the rationale behind its proposal.

“These businesses were facing significant challenges due to increased production costs and especially the rise in electricity prices, which cannot and should not be fully passed on to consumers,” said Michaelidou.

She said it was targeted financial assistance, presented in direct subsidies, with the primary benefit accruing to recipients as reduced electricity expenses.

The amount reduced is determined by the difference between a) the conventional energy market price for 2023 and b) a reference price applicable to half of the monthly electricity consumed by each enterprise.

“A ceiling of approximately 90% is foreseen for the reduction percentage, and in any case, a cap of €2 mln per beneficiary.”

Based on the regime, electricity providers are responsible for calculating and implementing the energy price reduction system.

Subsequently, the French government will reimburse the providers for the price reduction.

According to the announcement, the Commission found that the French regime aligns with Chapter 2.1 of the 2023 Temporary Framework for Crisis and Recovery.

Furthermore, France has included accompanying clauses to prevent unwarranted competition distortions among electricity suppliers.

“In light of this, the Commission deemed the regime necessary, suitable, and proportionate in addressing the serious economic disruption caused by the Ukrainian war.”