Referral of the proposed subsidy to Sumitomo Electric Industries Ltd by Highlands and Islands Enterprise

The Subsidy Advice Unit (SAU) has accepted a request for a report from Highlands and Islands Enterprise (HIE) concerning its proposed subsidy to Sumitomo Electric Industries Ltd (SEI).

From:
Competition and Markets Authority
Published
15 September 2023
Case type:
SAU referral
Case state:
Closed
Market sector:
Electronics
Opened:
4 August 2023
Closed:
15 September 2023

Administrative timetable

Date Action
15 September 2023 Final report published
18 August 2023 Deadline for receipt of any third party submissions (submissions after 5pm on this date cannot be taken into account)
4 August 2023 Beginning of reporting period

Final report

15 September 2023: The SAU has published its report providing advice to HIE concerning its proposed subsidy to SEI. The report sets out our evaluation of HIE’s Assessment of Compliance of its proposed subsidy with the requirements set out in the Subsidy Control Act 2022.

Request from Highlands and Islands Enterprise

4 August 2023: The SAU has accepted a request for a report from HIE for its proposed subsidy to SEI. This request relates to a Subsidy of Particular Interest.

The SAU will prepare a report, which will provide an evaluation of HIE’s assessment of whether the subsidy complies with the subsidy control requirements (Assessment of Compliance). The SAU will complete its report within 30 working days.

Information about the subsidy provided by Highlands and Islands Enterprise

Highlands and Islands Enterprise is proposing to award SEI a capital grant of £24.5m to build a cable manufacturing factory at Pitcalzean, adjacent to Port of Nigg in Easter Ross, 36 miles north of Inverness. The factory will be capable of producing High Voltage Direct Current and High Voltage Alternating Current cables and will make an important contribution to the supply chain for the UK’s offshore renewable energy generation and distribution requirements, supporting the UK and Scottish Government’s net zero targets and the need to improve energy security.

The global demand for submarine cables will increase significantly over the next ten years, with pressure from the European and Asian markets competing with the UK demand. A UK supplier will provide security of essential component supply for UK developers.

Once operational, the facility will employ 156 direct jobs in a disadvantaged region within the UK and, in addition, will support further indirect/induced employment of 198 jobs at Scottish level and 280 at UK level. The direct jobs will be locally significant given issues of population decline, higher unemployment, lower economic activity, levels of deprivation and lower productivity and pay levels. They will also assist with the just transition for redeployment from the carbon-based economy.

This would be the first inward investment for the nascent Inverness and Cromarty Firth Green Freeport and would contribute to the Freeport’s primary objective to maximise the local benefits from a pipeline of renewable energy projects which will create business opportunities and employment, attract inward investment, research and development, and position the Highlands of Scotland at the heart of the country’s commitment to becoming a net-zero economy.

SEI, based in Japan, is a large and experienced multi-national company and a world leader in the production of, and pioneering technology into the evolution of, subsea cables. Their presence in Scotland will give added benefits in knowledge transfer in technology and management, development of the local supply chain and academic links.

SEI’s planned investment requires a capital cost commitment of £350m and HIE proposes to contribute 7% towards this or 9.25% of the £265m capital costs eligible for UK public subsidy.

The planning, construction and commissioning of the factory is estimated to take 34 months and grant payments would be released in arrears on evidence of expenditure defrayed and satisfactory progress reports.

Information for third parties

If you wish to comment on matters relevant to the SAU’s evaluation of the Assessment of Compliance concerning HIE’s proposed subsidy to SEI, please send your comments before 5pm on the date stipulated in the timetable above. For guidance on representations relevant to the Assessment of Compliance, see the section on reporting period and transparency in the Operation of the subsidy control functions of the Subsidy Advice Unit.

Please send your submissions to us at SAU-HIECables2023@cma.gov.uk copying the public authority marie.mackintosh@hient.co.uk

Please also provide a contact address and explain in what capacity you are making the submission (for example, as an individual or a representative of a business or organisation).

Notes to third parties wishing to make a submission

  • the SAU will only take your submission into account if it can be shared with HIE. The SAU will send a copy of your submission to HIE together with its report. This is to allow the public authority to take account of the submission in its decision as to whether to grant or modify the scheme or its assessment. We therefore ask that you provide express consent for your full and unredacted submission to be shared. We also encourage you to share your submission directly with HIE using the email address provided above
  • the SAU may use the information you provide in its published report. Therefore, you should indicate in your submission whether any specified parts of it are commercially confidential. If the SAU wishes to refer in its published report to material identified as confidential, it will contact you in advance
  • for further details on confidentiality of third party submissions, see identifying confidential information in the Operation of the subsidy control functions of the Subsidy Advice Unit

Contact

Updates to this page

Published 15 September 2023
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