At the beginning of November, the Ministry of Industry and Trade published a Call from the support programme for large companies to help with increased gas and electricity costs under the so-called Temporary Crisis Framework of the European Commission. Applications will be accepted from 15 November 2022. Below we summarise the basic conditions of the Call for increased costs of natural gas and electricity due to the extraordinarily abrupt increase in their prices.

CALL 1 of the Support Programme for increased costs of natural gas and electricity as a result of the exceptionally abrupt increases in their prices – basic conditions:

1. Who is the support intended for?

To a specified group of business entities that are not covered by Government Regulation No.298 Coll. of 5 October 2022 on the determination of electricity and gas prices in an extraordinary market situation, as amended (the “capping regulation”), and who have at least one off-take and transmission point connected to the electricity or gas distribution system, and whose unit costs for gas or electricity increased more than twice in the period from 1 February 2022 to 31 October 2022 compared to 2021.

2. Who is eligible to apply for support?

The following can request support:

1. a natural person or legal entity performing business activities based on Act No. 455/1991 Coll., on trade activity (Trade Licensing Act), as amended, or in a similar manner;
2. which has at least one off-take and transmission point (“OTP”) according to Article 3.9 of the Call, which is not covered by Government Regulation No. 298 Coll. of 5 October 2022 on the determination of electricity and gas prices in an extraordinary market situation, as amended (the “capping regulation”);
3. prove the eligible costs according to Article 3.8 of the Call:

Eligible costs may be demonstrated by month or in aggregate for the entire eligible period. These costs are determined based on the product of consumption (of electricity or natural gas in the eligible period) and a defined unit price differential (unit prices in the eligible period are compared to twice the 2021 reference unit price).

1. business according to the CZ-NACE classification of economic activities does not belong into the exempted fields.
2. What are the conditions for submitting an application?

The applicant may submit only one application – all Off-Take and Transmission Points (OTP) according to Article 3.9 of the Call, which are not subject to capping (Government Regulation No. 298/2022 Coll., as amended), may be included.

Applicant:

1. is not bankrupt – the court has not decided on the bankruptcy of the entrepreneur (applicant) under Act No. 182/2006 Coll., on bankruptcy and methods of its resolution (Insolvency Act), with the exception of bankruptcy where the court has authorized reorganization by the date of filing the application;
2. it is not under distrainment – the court or administrative authority has not issued a decision ordering the enforcement of a judgment regarding its property or has not ordered the distrainment of its property;
3. is not in liquidation;
4. is not an unreliable payer or an unreliable person under Act No. 235/2004 Coll. on Value Added Tax, as amended;
5. is not in a conflict of interest – it is not a company in which a public official referred to in article 2(1)(c) of Act No. 159/2006 Coll., on Conflict of Interest, as amended, or a person controlled by him/her owns a share representing at least 25% of the shareholder’s participation in the company;
6. it has no arrears to selected institutions and to the providers of support from projects co-financed from the budget of the European Union. The agreement on instalments or tax postponement under article 156 of Act No. 280/2009 Coll., the Tax Code, is not a situation where the applicant for support would be in default;
7. neither the owner nor co-owner of the business entity applying for support is on the EU sanctions lists, i.e. the business is not owned, co-owned or controlled by a person (natural or legal) appearing on the EU sanctions lists maintained in connection with unlawful activities of the Russian Federation and the Republic of Belarus against Ukraine, irrespective of the size of his or her shareholding.
8. the management and statutory bodies of the beneficiary of the grant must declare that, at the time of submission of the application for support, they have fully and not only temporarily waived any increase in their remuneration (including all components of remuneration) and variable remuneration for the current financial year and have not received any direct or indirect compensation for such waiver. To the extent that the recipient is part of a group company, this exemption must also apply to any remuneration from all entities in the group.  
9. Amount of support

The applicant may apply depending on which group they fall into:

1. for an applicant that does not apply as an energy-intensive enterprise or an enterprise in selected sectors, 30 % of the eligible costs, up to a maximum of CZK 45 million per beneficiary
2. for an energy-intensive enterprise, the amount of support shall be 50 % of the eligible costs, up to a maximum of the lower of: 80% of operating loss or CZK 200 million per beneficiary
3. for an undertaking in selected sectors, the amount of support shall be 70 % of eligible costs, up to a maximum of the lower of: 80 % of Operating Loss or CZK 200 million per beneficiary.
4. Deadline for submitting the application

Applications can be submitted from 15 November 2022 at 9:00 a.m. until 31 January 2023 at 24:00 p.m.

6.    Call allocation

The total allocation for the Call reaches CZK 30 billion.

7.    Definition of basic terms

• The eligible period is from 1 February 2022 to 31 October 2022.
• The reference period is the period from 1 January to 31 December 2021
• For the purposes of the Call, an energy-intensive enterprise is an applicant, for whom the cost of consumption of energy products and electricity reaches at least 3.0% of turnover. The applicant shall demonstrate that it is an energy-intensive enterprise as defined in Annex 4 of the Call.

If the applicant applies as an Energy Intensive Enterprise or Enterprise in Selected Sectors, in addition to the conditions for an eligible applicant under Article 5.1 of the Call, it must also meet the following conditions:

1. the applicant is in Operating Loss (EBITDA ˂ 0)
2. Eligible costs must represent at least 50% of the Operating Loss. 

If you are interested, please contact us and we will be happy to help you prepare your application.

Author: Jiří Dvořák, Libor Kaňák