Electricity

Croatia presents EUR 637 million package to mitigate surge in power, gas prices

Croatia presents EUR 637 million package to mitigate energy crisis blow to electricity, gas pries

Photo: Government of Croatia

Published

February 17, 2022

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Published:

February 17, 2022

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Croatia has prepared a package of measures worth EUR 637 million to mitigate the impact of the energy crisis. The measures are planned to lower the expected increase of electricity and gas prices to 9.6 percent and 20 percent, respectively.

Prime Minister Andrej Plenković has presented a plan for households, businesses, and farmers and pointed out that without the package the electricity bills would rise by 23 percent from April 1, compared to 79 percent for gas. The measures will become operational on April 1 and will be valid until March 31, 2023.

Plenković pointed to the wave of rising prices in Europe caused by the global energy crisis as the main reason for the adoption of the package.

Without the measures, electricity prices would rise by 23 percent and gas prices by 79 percent

Of the total amount of EUR 637 million, EUR 279 million is tax relief through a reduction of the value-added tax, while EUR 159 million is assistance for the payment of gas bills. The government plans to disburse EUR 106 million to vulnerable energy consumers and pensioners, and EUR 32 million to farmers and fishermen. The remaining EUR 61 million is intended to limit electricity costs.

The Prime Minister said the average increase of the electricity prices was 30 percent and that gas prices surged 70 percent in the EU at the end of last year. As prices for households are regulated in Croatia, there was no increase, he added.

Mitigating the growth of electricity and gas prices for households

According to Plenković, the increase of electricity costs will be limited in order to lower the expected price increase. The measure will save EUR 61 million for households, but state-owned power utility Hrvatska Elektroprivreda (HEP) will suffer the same drop in income, he added.

VAT on natural gas will be reduced from 23 percent to 5 percent and a subsidy of 1.3 euro cents per kWh will be introduced. The Ministry of Economy will reimburse power suppliers from April 1 until March 31, 2023.

EUR 80 million is earmarked for the measure, and the money will be secured from the revenue from the sale of emission allowances for CO2, Plenković explained.

Aid for entrepreneurs

Micro, small and medium entrepreneurs with an average annual consumption of up to 10 GWh are eligible for subsidies. The amount of aid is 2 euro cents. It will be paid through vouchers.

Entrepreneurs will apply for subsidies through the HAMAG-BICRO application, and the amount of aid allocated to a single voucher will be determined on the basis of individual annual consumption. The state aid can be used until March 2023, Plenković explained.

The government plans EUR 80 million for the measure, and the funds will be secured by the sale of emission allowances for CO2.

VAT on pellets, briquettes, wood chips and firewood will be reduced from 25 percent to 13 percent.

Payments for vulnerable energy consumers

Plenković noted vulnerable energy consumers, about 91,000 of them, are currently receiving vouchers of EUR 27 each to pay electricity bills. The program will be expanded to 5,700 beneficiaries of the national compensation for the elderly. Also, a voucher for gas will be introduced, and the amount doubled to EUR 54.

The government earmarked EUR 40 million for the measure.

A special one-time fee is envisaged for 721,000 pensioners with pensions lower than EUR 531, which will require a total payment of EUR 62 million.

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