BRUSSELS, Nov 13 (Reuters) - The European Union's executive arm on Friday gave permission for Romania to provide guarantees to car producer Ford Romania SA under EU state aid rules.
The decision by the European Commission allows Ford Romania to access a loan from the European Investment Bank (EIB) for the development of low-CO2 engines and vehicle production at Ford's (F.N) Craiova plant.
"The Commission can authorise this state guarantee, which should contribute to Ford's trans-European investment project for environmentally friendly cars without giving rise to undue distortions of competition," the Commission said in a statement.
Ford Romania is expected to receive around 400 million euros ($595 million) from the EIB, with the loan over five years, from 2009-14.
Ford Romania will pay a premium for the guarantees and provide the Romanian government with high-quality collateral covering the guaranteed amount, the Commission said.
Ford began production at the plant in southwestern Romania in September after buying it in 2008 for 57 million euros. The plant produced 24,000 Daewoo vehicles in 2006 and is expected to employ 7,000 people when fully operational. ($1=.6722 euro)