The Slovenia Times

Government adopts aid package to see businesses through energy crisis

A gas compression facility in Ajdovščina. Photo: Plinovodi

The government adopted a long-awaited bill designed to help businesses get through the energy crisis on 6 December. The bill includes subsidies to mitigate high costs of electricity, gas and steam, job retention subsidies and liquidity loans. The measures are valued €1.2 billion in total.

Businesses will be eligible for the aid only if the prices of electricity, natural gas or steam they buy at increase by over 50% compared to 2021. The subsidies will cover between 40% and 80% of eligible expenses, depending on the type of aid.

"This package of measures is one of the broadest ever in Slovenia's history. It encompasses all industries and all companies, from small to big. The aid targets the businesses that will truly need it," Economy Minister Matjaž Han commented.

"Moreover, as a preventative measure, we are ready for potential worsening of the situation in the economy, with companies having to curtail their production processes temporarily," said Han. He hopes the bill will be passed as soon as possible to take effect on 1 January 2023.

The bill entails five types of aid, including aid for loss of revenue and aid for high energy users. The conditions will be aligned with the EU's crisis framework for state aid. Companies will be eligible only for one of the measures.

A short-time work subsidy scheme will be available between 1 January and 31 March 2023, while the furlough subsidy scheme will be in place between 1 January and 30 June 2023. The subsidies will cover 80% of gross pay up to a maximum of the average gross pay for October 2022.

The bill also entails a variety of liquidity loans, amounting to a total of €250 million. The subsidies for high prices of electricity, gas and steam are valued at €850 million and the furlough and short-time work schemes at €100 million.

"The business sector participated in the drafting of this bill all along and we took its proposals into account as much as possible," said Han, adding that the bill used to the maximum possible extent the possibilities within the EU's temporary crisis framework.

Moreover, the SID investment bank will offer cheap loans for working capital investments of up to a total of €150 million in cooperation with the Economy Ministry, and loans for the road hauling sector in total value of €50 million in cooperation with the Infrastructure Ministry.

The package, which now needs to be passed by parliament, was adopted after the government talked it through with representatives of businesses and trade unions.

Business in particular have been unhappy because the government has not imposed a cap on electricity prices. The prices keep rising and have exceeded €500 per megawatt-hour in some cases.

"With prices this high even subsidies cannot help," Marjan Trobiš, the head of the Employers' Association, said after the package was discussed at the country's main industrial relations' forum on 2 December. "The companies that will have to buy electricity at such high prices will not be competitive," he added.

Employers were also unhappy with the proposal that companies receiving subsidies for furloughed workers or those on shorter hours would need to allocate the same amount of money as they receive from the state for green transition within the next two years. This has been changed so that now they will have to invest half the amount in green transition within the next 30 months.

The trade unions are happy that the furlough and short-work schemes require of the companies which will receive aid to pledge not to lay-off staff in the next six months. They are also happy that the compensation for furlough will not be lower than the minimum wage.

Rather than a price cap, the government has adopted a regulation to set a formula for a reference price of electricity for large companies, which came into effect on 30 November.

The electricity pricing mechanism will apply for the supply of electricity to business customers for 2023, valid only for supply contracts signed between 30 November and 31 December 2022.

Under the regulation, the electricity supplier is obliged to offer and conclude a supply contract for a fixed price product for the higher and lower daily tariff rates when it comes to the maximum amount of electricity consumption of the customer.

Infrastructure Minister Bojan Kumer said the reference prices were to be linked to Germany's electricity exchange where the prices had been lower.

The Chamber of Commerce and Industry (GZS) was critical about the measure saying it would not bring prices in the range between €150 and €250 as expected. If small and mid-sized companies will have to purchase electricity at such a cost, some will have a hard time to stay afloat, the GZS said.


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