3.3  State aid

For Structural Funds, the beneficiary should always be a public sector entity. The grant is therefore not paid directly from the Commission to the project company, but has to be channelled through a national public body. This is treated differently by individual EU member states, but some national jurisdictions may consider such transfer as state aid. Complications arise, inter alia, from the way the grant element is advertised in the PPP tender, from the exact payment mechanism from the grant-receiving public entity to the private partner and from potential cost savings during project implementation, which affect the project cost and thus the profit of the private partner. The procuring authorities need a high degree of due diligence to avoid conflict with state aid regulations and rules differ across the EU. State aid would not be an issue if it were possible to draw the grant into a fund and apply it to subsidise the public sector's regular availability payments over the life of the project.