
Article 1 
The compensation for operating deficits, the compensation for the costs of closing down the rotating drum furnaces and the state guarantee covering 30 % of the costs of removal and decontamination, which follow from the concession agreement between the Netherlands and AVR Nuts and which have been partially implemented by the Netherlands, constitute state aid within the meaning of Article 87(1) of the Treaty.
Article 2 
Subject to the conditions set out in Article 3 of this decision, the state aid referred to in Article 1, with the exception of the aid referred to in Article 4 and granted to AVR IW, is compatible with the common market as it compensates the recipient for the costs of a service of general economic interest within the meaning of Article 86(2) of the Treaty.
Article 3 

1. The aid for AVR Nuts shall not exceed the sum of the predetermined deficits, the actual additional losses incurred by AVR Nuts and a reasonable profit margin during the period covered by the concession agreement. If, in practice, the profit level over the period during which aid is granted proves to be higher than the rate of return on Dutch government bonds plus 2 percentage points, the Netherlands shall retroactively adjust the aid level.
2. The Netherlands shall submit a report on the application of the measures in 2004 and annual reports on the implementation of the guarantee for the costs of removal and decontamination and on the application of the measures for the C2 depot for the remaining duration. It shall submit an interim report on the verification of the compensation for closure costs by the spring of 2006 and a final report by the spring of 2007. These reports shall justify the compensation, taking due account of the issues raised in Annex II.
Article 4 
The aid for AVR IW consisting in the compensation for acquisition costs amounting to €2 396 000 is incompatible with the common market.
Article 5 

1. The Netherlands shall take all necessary measures to recover from the recipient, AVR IW, the aid referred to in Article 4.
2. Recovery shall be effected without delay and in accordance with the procedures of national law, provided that they allow the immediate and effective execution of the decision.
3. The aid to be recovered shall include interest from the date on which it was at the disposal of the recipient until the date of its recovery.
4. Interest shall be calculated in accordance with the provisions of Chapter V of Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council Regulation (EC) No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty.
Article 6 

(1) The Netherlands shall inform the Commission, within two months of notification of this decision, of the measures already taken and planned to recover the aid referred to in Article 4. It shall provide this information using the questionnaire attached in Annex III to this decision.
2. The Netherlands shall also submit within two months of notification of this decision documents showing that recovery proceedings have been initiated against AVR IW.
Article 7 
This decision is addressed to Kingdom of the Netherlands.
Done at Brussels, 22 June 2005.
For the Commission
Neelie KROES
Member of the Commission
ANNEX I

The methodology to determine the budget deficits in advance was developed by an independent consultant at the request of the Ministry for Housing, Spatial Planning and the Environment. It is dated 16 April 2002.
The methodology is based on a detailed assessment of the budgets for 2002 and subsequently makes extrapolations for 2003, taking into account all known factors that can be expected to affect the actual outcome for 2003. For later years, the same procedure would be followed, on each occasion for a two-year period. Owing to unexpected developments and the potential closure of the second RDF, AVR and the Dutch authorities agreed to have only a one-year budget for 2004.
The 2002 budget is based on estimated revenues, historical ratios for variable costs and estimates for other costs. The investment budget for 2002-16 and the specific investments planned for 2002 are also taken into account.
On basis of this budget, a forecasting model was built, including income statements, balance sheets and cash flow statements. The most important assumptions underlying the forecasting model are as follows:

— The scenario chosen assumes that approximately 85 000 tonnes can be processed annually (with some downtime due to recurring exceptional events being taken into account), resulting in estimated revenues of €30,5 million.
— Exceptional events are not accounted for separately in the model, it being assumed that they form part of the assumed recurring exceptional events.
— For depreciation and cost allocation, the estimates for 2003 differ from those for 2002. As of 2003, revenues and costs will rise by 3,5 %. An increase in efficiency is also taken into account.
— The old tangible fixed assets are valued at zero since they are not economically viable without the aid. They are not, therefore, included in the rental charged by AVR Chemie to AVR Nuts; this rental charge will include all AVR's other costs, excluding additions to the C2 provision (as this relates to the past) and including a 5 % mark-up for tax purposes.
— AVR Holding will provide AVR Chemie and AVR Nuts with substantial finance for which interest will be charged at a rate of 4,891 % (in 2002 and 2003).
— Cost allocations by AVR Holding are included; they total €4,3 million for 2002. For 2002 and 2003, these allocations include €400 000 for commercial costs which will not recur after 2003.
— A service contract lays down the conditions for the supply of services between AVR's various subsidiaries. Transfer prices are based mostly on cost prices calculated according to the activity-based costing method and also on market prices.
— No provisions are made for demolition costs since their payment is guaranteed by AVR (70 %) and the State (30 %).
— No provisions are made for personnel layoffs since the business continues and the financial exposures for any future layoffs remain at operator level. The State cannot be liable for any future layoff costs in the event of the activities of AVR Nuts being terminated. The State will never be held liable for severance payments that may be payable in the event of future layoffs resulting from the cessation of activities and/or the discontinuation of the agreement with AVR.
— AVR Holding is liable for negative results and for the effects of not meeting certain quality, safety and environmental requirements, account being taken of changing environmental requirements (one defined exception was made and this can be discussed with the State).
— There were special provisions for possible upward adjustment of the aid for three specific situations concerning: 1. the permissible temperature in the afterburning chamber; 2. potential economies from the use of secondary fuels for which an experiment was to be carried out; and 3. the legal question whether or not excise duty was to be paid on oil-containing waste.

Profit and loss 2002 predetermined 2003 predetermined 2003 actual 2004 predetermined
Revenue from RDF waste 29,3 30,4 22,8 15,9
Revenue from C2 waste 0,5 0,5 1,2 1,2
Revenue from steam 0,6 0,7 0,7 0,4
Total revenue 30,5 31,6 24,7 17,5
Materials and energy 3,8 3,9 3,0 2,4
Deposit of remaining materials 2,0 2,1 1,2 1,0
Processing/storage 2,0 2,1 1,8 0,5
Transport costs 0,2 0,2 0,3 0,2
Total variable costs 8,0 8,2 6,4 4,1
Personnel costs 3,8 4,0 4,2 3,6
Third-party personnel 0,3 0,3 0,7 0,4
Maintenance 7,8 8,1 7,0 6,0
Layoff provision – – 0,7 0,2
Operational provisions – – – –
General expenses 0,6 0,6 2,4 0,8
Total direct fixed costs 12,5 12,9 15,0 11,0
Costs charged by AVR Holding 4,3 4,0 2,8 3,6
Other indirect costs 5,4 5,6 3,9 3,8
Total indirect fixed costs 9,8 9,6 6,7 7,4
Rental charged by AVR Chemie 2,0 3,5 3,7 3,1
Depreciation 0,1 0,2 0,2 0,5
Interest costs 0,2 0,0 0,6 0,3
Operating deficit 1,6 2,9 7,8 8,9
Costs incurred by AVR Holding and partially included in the budget include costs for security, canteen, administration, common facilities, management and ICT. The costs charged by AVR Holding are based on detailed estimates.

ANNEX II

— Actual revenue and actual costs


— Verification of direct link to the SGEI for each of the investments
— Any proceeds from sales of the assets concerned and any benefits from continued use for other purposes


— Actual cost of early dismissal: indication of the full or part-time employment of the person concerned in relation to the SGEI, actual payments for the employees concerned, actual duration of the payments for redeployment within or outside AVR
— Recurrent fixed costs: general RDF costs: verification whether failed coverage (gemiste dekkingen) is appropriate and has not been met by other means; verification of actual accounting, legal and banking cost; verification of actual costs for other elements
— Recurrent fixed costs: security, canteen, purchasing, administrative facilities at Professor Gerbrandyweg: actual costs of transporting electricity based on the actual date on which the facility with Eneco was ended or bought back; costs forgone of rent for offices, etc., taking account of any proceeds from actual re-use; verification whether failed coverage for purchasing function for restaurant, warehouse and security is appropriate and has not been met by other means
— Recurrent fixed costs: ICT infrastructure: verification whether missed coverage for ICT infrastructure has not been met by other means
— Recurrent fixed costs: personnel costs: actual costs of central telephone function and leased lines
— Recurrent fixed cost: rent/lease of equipment: actual missed coverage of specialised trucks and forklift trucks and actual proceeds from sales or alternative use within AVR
— Recurrent fixed cost: other overheads: actual costs and actual reduction in costs of maintenance and cleaning contracts
— Recurrent fixed costs


— Verification of actual removal and decontamination costs for the installations directly used for the SGEI
The verification includes a calculation showing that the aid does not lead to a higher rate of return than the return on Dutch government bonds plus 2 percentage points.

ANNEX III
1.  1.1 

Date(s) of payment Amount of aid Currency Identity of recipient
   AVR IW
   
   



Comments:
 1.2 Please explain in detail how the interest payable on the amount of aid to be recovered will be calculated.

2.  2.1 Please describe in detail what measures have been taken and what measures are planned to bring about an immediate and effective recovery of the aid. Please explain what alternative measures are available under national law to effect recovery. Where relevant, please indicate the legal basis for the measures taken/planned.
 2.2 By what date will the recovery of the aid be completed?

3.  3.1 

Date(s) Amount of aid repaid Currency Identify of recipient
   AVR IW
   
   

 3.2 Please attach supporting documents for the repayments shown in the table at point 3.1.
