EU to OK 80 million euro aid to Poland's FSO

BRUSSELS -- The European Commission is set to approve Poland's plans to grant carmaker FSO around 80 million euros ($105 million) in state aid if it caps production in the next few years, a Commission source said today.

Poland wanted to provide state guarantees to FSO as part of a rescue plan after the carmaker was left out of a deal under which the operations of its bankrupt major shareholder Daewoo Motors were taken over by General Motors.

The Commission is expected to order FSO to limit its car production to 150,000 units a year, the Commission source said, down from the 220,000 the company wants to manufacture.

In 2005, FSO made just 40,000 cars, a fifth of its all-time record production of 200,000 in 1999.

Ukrainian car producer AvtoZAZ bought FSO last year from the Polish government and in May said it would invest $130 million in the plant to produce cars including GM's Chevrolet.

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