Nearly half of Slovenian firms risk collapse over high energy costs

Respondents in a poll conducted by the Chamber of Commerce and Industry of Slovenia expect energy expenses to jump 128% this year and almost half of them said the high costs put their long-term existence in jeopardy.

Energy costs for companies increased by close to 18% last year, according to the results of a survey published by the Chamber of Commerce and Industry of Slovenia. The bills are expected to surge 128% this year!

The share of companies that said their long-term existence is in jeopardy came in at a whopping 47% and 12% revealed they turned to production cuts to cope with rising energy costs. There were 148 respondents in the survey.

Among those that participated, 30% suffered an increase in energy expenses of more than 10% last year. Over 35% of them estimated the increase in costs in 2022 would exceed 300%. The chamber said it assumes the group still had energy supply contracts at low prices last year and that they don’t have such deals now or they signed contracts at current market prices.

Only 21% of firms have supply contracts for gas

The data showed only 43.5% secured their entire electricity demand with contracts for 2022, compared to 21% for gas. One tenth has no contract for electricity whatsoever for this year, which means they must procure power in the market and that they are exposed to the current volatility, while 51% of the respondents didn’t close any deals for gas supply.

The poll results showed 27% of businesses are reducing headcount

The vast majority of firms, 88%, said they increased the prices of their products as a result of the surge in energy costs, while 39% limited production. At the same time, 27% turned to job cuts, 12% reported they have been halting production and 8% moved capacities abroad.

Asked about the consequences of the energy crisis, 80% of participants said rising energy costs would reduce their profits while 75% pointed to the necessity of raising the prices of their products.

Financial reserves are depleted

Companies are saying they ran out of spare cash, that they are canceling shifts, extending vacations and postponing nonessential production activities. Simultaneously, customers are failing to confirm orders, according to the poll results.

General Manager of the Chamber of Commerce and Industry Vesna Nahtigal said most of the burden is expected yet to be felt, in 2022. Many companies had long-term strategies for buying energy, but they were still caught unprepared for the extreme price growth, which had no economic justification, she pointed out.

Nahtigal: The Government of Slovenia must intervene to ease energy price growth and help struggling companies

Nahtigal also warned of high prices of raw materials, delays in supply chains and shortages. “A stable electricity supply and a reasonable price must be ensured at the national level. Otherwise, there will be no economic growth and the dream of expected high added value will be over,” she underscored.

The government should propose at the European Union level that only the users of carbon dioxide emission certificates should be allowed to buy them, as opposed to market speculators, Nahtigal added. Slovenia also immediately needs to intervene with regard to energy prices, at least temporarily, or provide struggling companies with financial aid, she stressed. The chamber’s general manager said network charges, which were increased at the beginning of the year, need to be frozen.

If expensive energy is a strategy for the green transition, energy-intensive activities will have a bad future or no future, Nahtigal asserted.