Ljubljana related

30 Aug 2022, 12:01 PM

STA, 29 August 2022 - Prime Minister Robert Golob and European Commission President Ursula von der Leyen exchanged views on topical EU challenges, including the situation on the electricity market, as they met over working lunch on the sidelines of the Bled Strategic Forum (BSF) on Monday. 

Discussing the situation on the electricity market, where prices have skyrocketted in recent days, the pair agreed that voluntary gas saving and solidarity will be crucial in the coming months.

They also pointed to the need for the EU to remain ambitious in diversifying its energy supply and in the green transition, Golob's office said in a statement.

A changed geopolitical situation in Europe and the EU enlargement to the Western Balkans were also on the agenda, in particular Bosnia-Herzegovina's accession process.

Speaking to the press after the meeting, Golob said "a number of measures were discussed that must be taken, from very short-term ones to long-term measures that will last for years".

He hailed what he termed a "very open dialogue with the Commission", and said that Slovenia could and would contribute a lot in searching for solutions.

These solutions involve "protecting Europe's energy sector and energy companies from the speculative attacks that have been taking place over the past week", he said.

Von der Leyen, who also met with President Borut Pahor as part of her attendance of the BSF, meanwhile tweeted she had had "very good exchanges" with both officials.

"We discussed the importance of further strengthening ties with our Western Balkans partners and of tackling the situation on energy markets and security of supply," she added.

This was Golob and von der Leyen's second meeting since the Slovenian prime minister travelled to Brussels in June, the same month his government took office.

29 Aug 2022, 13:01 PM

STA, 29 August 2022 - The Infrastructure Ministry has drawn up a draft bill to allow the government to declare a state of emergency in case of disruption in electricity or gas supplies. It provides measures such as consumption cuts, state guarantees to buy gas outside the EU, and even departure from environmental standards in case of a switch of fuel.

The draft, which has been submitted for inter-governmental consultation until 26 September, would make it possible for the government to declare a higher or lower level of risk to energy supply in case of existing or expected supply disruptions.

A lower risk would entail preparing for an emergency in the supply and notifying energy companies and consumers to get ready for an emergency and to take measures that are feasible.

A higher level of risk would kick in when a state of emergency is declared in the supply of natural gas and electricity. At this stage all of the national potential for generation of electricity and heat would have to be tapped.

The government would be able to directly decree state-owned companies to take measures to ensure reliable supply of energy.

During the period of higher risk, the provisions of the environmental permits concerning fuel and emission limit values would not apply to power plants, co-generation plants and other installations for which such an environmental permit is required if they needed to switch fuel such as gas for other source.

They would be allowed to derogate from the provisions of the environmental permits as long as they are not projected to exceed or have already exceeded alert levels for sulphur dioxide or nitrogen dioxide in the air.

During such a state of emergency, the temperature of the Sava downstream from the Krško Nuclear Power Plant from 1 October to 31 April would be capped at 3.5 degrees Celsius above the river temperature at the plant's intake, which is half a degree higher than specified now.

When it comes to gas, the parent company would be required to ensure gas storage in other EU member states as of 1 November of the current year in an amount equal to at least 15% of the average annual gas supply of the group under its control to final customers in Slovenia over the last five years.

The draft bill also envisages up to EUR 300 million in state loan guarantees to buy gas in countries outside the EU.

When a lower level of risk was declared, the draft foresees creating additional reserves of substitute fuel for gas-fired power plants for when they need to generate electricity but gas is not available.

Those additional mandatory reserves would be released under the higher risk scenario, up to the level where the mandatory stocks of oil and oil products (for 90 days) are still available.

Final consumers would be required to make a voluntary effort to reduce gas and electricity consumption from 1 October 2022 to 31 March 2023 by at last 15% compared to their average consumption in the same period over the past five years.

State-owned companies investing in electricity production facilities from renewable energy sources with an installed capacity of 250 megawatts or more would have to distribute half the electricity generated annually to households in Slovenia and form a supply community.

The government would decree the temperature of heating or cooling in public buildings and prescribe limits to the lighting of buildings, premises or spaces.

Natural-gas customers would have the right not to connect to or to disconnect from the gas distribution system, regardless of the provisions on priority use of energy products, on mandatory connection to the gas distribution network and on mandatory use of gas for heating of buildings and hot water for households, as set down in the relevant documents, without having to pay a contractual penalty.

Under gas supply contracts in force as the law entered into force, it would not be possible to charge penalties for lower gas consumption than contractually agreed.

Concessionaires for the commercial exploitation of water for generation will pay the same concession for the period between 2022 and 2025 as they did in 2020.

Electricity for losses in the transmission and distribution network would be provided at cost by electricity producers directly or indirectly wholly owned by the state if the price on the Hungarian stock exchange on the last day of June of the current year exceeds EUR 120 per megawatt-hour for the coming year.

26 Aug 2022, 14:30 PM

STA, 26 August 2022 - Despite more than doubling its revenue, Slovenia's energy group Petrol posted a net loss of EUR 1.3 million in the first half of the year as a result of fuel price regulation, the company said on Friday.

The group saw sales revenue rise by 126% to EUR 4.2 billion, a figure well above the target, on the back of increased volume sales of fuels and oil derivatives as well as price hikes.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) stood at EUR 48.6 million, down by 52% year-on-year and 64% below plans.

The net loss is a result of the steep drop in EBITDA that was caused by the price regulation measures in Slovenia.

The price regulation forced Petrol "to sell fuels at a lower retail price than the purchase price 90% of the time between 15 March 2022 and the end of June".

"The company's EBITDA loss of EUR 108.9 million in Slovenia was caused by the government's freeze on retail prices of petroleum products from 15 March to 30 April and the reintroduction of the cap on 11 May for a period of 90 days, which was lifted prematurely by the current government on 21 June," the company said.

The group's EBITDA loss in Croatia, where the price regulation has been in force since 7 February, stood at EUR 14.5 million.

Adjusted gross profit for the first six months of the year totalled EUR 245.4 million, down 5% year-on-year and 19% below plans. The positive contribution to gross profit growth due to the integration of the company Crodux Derivati Dva into the group was reversed by the impact of price caps in Slovenia and Croatia.

In 2021, Petrol posted nearly EUR 5 billion in sales revenue and EUR 124.5 million in net profit. In the first quarter of this year, the group was still in the black as net profit stood at EUR 32.4 million and was higher than the quarter-one figure in 2021.

Petrol's chief financial officer Matija Bitenc told the STA that the company was hoping to reach an agreement with the government on reimbursement of damages it incurred during the first wave of price regulation in spring, under the previous government.

"We incurred costs, sold more fuel, but we did not cover the purchase price," he said." A request for reimbursement has already been sent to the government. Several meetings with the finance and economy ministries have been held but a final agreement has not been reached yet.

He also warned that the uncertainty might have an impact on the company's credit rating. In March S&P put Petrol on watch with a negative outlook as it awaits information about how important Petrol is for the state.

"The rating agency has so far assessed that in the event of any problems the state would come to the rescue ... Today their view is slightly different and they are wondering if this is still the case," he said.

A meeting with S&P is scheduled for September, until which time they want to know to what extent the damage will be reimbursed by the state. "Having Petrol in poor financial shape is not good for anyone at this time, least of all for the taxpayers," he said.

With its current rating Petrol does not need bank guarantees to purchase oil derivatives, but if the rating is downgraded they would have to issue guarantees in the EUR 300-500 million range per month, he said.

The Economy Ministry told the STA there had been no final decision yet about compensation. If one is made, the government will first set the criteria for eligibility and require evidence.

"In recent months some oil companies have proactively sent 'notifications of damages' to the [ministry], but we do not consider these formal claims," it said.

Under the law on price controls, the government has the prerogative to decide whether to reimburse companies or not. It also decides on the appropriate means of compensation, either financial remuneration, tax benefits or other forms of financial incentives, it said.

26 Aug 2022, 11:38 AM

STA, 25 August 2022 - The government decided on Thursday to reach an agreement on solidarity measures to ensure security of gas supply with Croatia. The agreement would allow Slovenia to ask Croatia to provide gas to Slovenia's protected customers if gas supply was disrupted, and vice versa. A similar agreement with Italy has already been ratified.

The draft agreement sets down the technical, legal and financial elements for such a solidarity mechanism between EU member states.

It is based on the EU regulation concerning measures to safeguard security of gas supply, the Government Communication Office (UKOM) said after the government session.

Slovenia would activate the solidarity support mechanism as a last resort, after having taken all possible measures to ensure gas supply to its protected customers, including cutting off the gas supply to unprotected customers.

Under the Slovenian law, protected customers are households but also basic social services connected to the distribution or transmission system, such as healthcare, education and care services.

The agreement obligates the country providing solidarity assistance to do its utmost to be able to offer the necessary amount of gas to the recipient country.

The recipient country may decide to accept a particular offer or not. If it accepts it, it also assumes the obligation to pay for the gas received, UKOM said.

If the agreement is signed, either party, Slovenia or Croatia, could ask for a solidarity gas supply.

In mid-June, the National Assembly unanimously ratified a similar agreement with Italy, and activities to sign one with Austria are also under way.

25 Aug 2022, 13:04 PM

STA, 24 August 2022 - A survey conducted by the Chamber of Trade Crafts and Small Business (OZS) among its members has shown the high energy costs are threatening the existence of one out of three businesses surveyed. As the situation is to worsen further, the chamber urged the government to set out measures to help the economy in 2023 as soon as possible.

Following a similar appeal issued by the Chamber of Commerce and Industry (GZS), its counterpart representing large companies, the OZS noted "enormous, even five-fold" increase in electricity and gas bills this year, expressing concerns for 2023.

The survey conducted among 820 entrepreneurs members of the OZS in recent weeks showed that three out of four expect the high energy costs will slash their profits and 32% said the existence of their company was under threat.

Almost one in three (29%) said they would have to scale down their operations and 15% were considering layoffs.

More than half of the surveyed businesses (53%) saw their electricity bills rise by up to 50% on last year, 29% say they went up by 50-100% and the remaining 18% are now paying 100-500% higher electricity bills.

As many as 69% of those surveyed have not yet signed contracts for power supply in 2023.

When it comes to gas bills, 59% reported an increase of up to 50%, 22% saw their bills go up by 50-100% and the remaining 19% reported a 100-500% surge.

Based on the survey, the OZS estimates the capping of prices for small businesses will cover most small entrepreneurs, but with larger consumers the government package to help businesses cope with high electricity and gas prices would not suffice.

The OZS urged the government to follow up with a more extensive scheme, as well as job-retention schemes to be able to furlough their workers or put them on shortened work time, which they say proved effective during the Covid-19 crisis.

Prime Minister Robert Golob has announced a meeting with business will be held within a fortnight to discuss the situation and solutions for next year. "If this year 40 million euro in aid was needed, it could come up to a billion next year," Golob said earlier this week.

24 Aug 2022, 11:23 AM

STA, 23 August 2022 - The National Assembly unanimously passed on Tuesday changes to the VAT act reducing VAT on electricity, gas, biomass and remote heating from 22% to 9.5% between 1 September 2022 and 31 May 2023.

The changes come as part of efforts to mitigate the cost of living crisis with Finance Ministry State Secretary Tilen Božič telling MPs that the VAT cut will only fulfil its purpose if prices are regulated as well.

Initially, this was not incorporated in the changes, and the senior coalition Freedom Movement filed an amendment to that effect with the support of the coalition Left.

Under the amendment, prices will be regulated for the duration of the VAT reduction for products which will be regulated on 1 September 2022.

At the moment, this entails electricity and gas for households, small companies and users classified as protected, including schools and care homes.

Božič said the Infrastructure Ministry was conducting a study to see what additional measures, including price regulation, would further contribute to reducing heating bills. The study is to be completed by the end of the month.

The changes have been fast-tracked through parliament and enjoy the support of all parliamentary parties, even though some expressed regret that VAT could not be lowered below 9.5% and that it does not apply to food.

The opposition Democrats (SDS) filed an amendment under which VAT would be reduced to 5%, including for heating oil, although EU law renders this impossible.

Nevertheless, the SDS believes that Slovenia should declare a state of emergency in energy and reduce heating oil VAT.

"You're worried that this would not be in line with the EU directive. But of course it is in line if we act for the good of the citizens," said SDS MP Janez Magyar.

Božič said the government did not want to propose a solution that would not be in line with EU law. "At first, it would feel nice in our pockets, until we would have to pay it all back with interest. No such lunch is free."

The revenue shortfall from the reduction to 9.5% is estimated at EUR 130 million, while a reduction to 5% would mean an additional EUR 50 million less in budget revenue, Božič said.

On Monday, Prime Minister Robert Golob said that the government does not believe the reduction to 5% to be necessary because the cut to 9.5% will be accompanied by the freezing of prices for electricity and gas. He said the government would rather use budget funds to cut VAT on food, if necessary.

The opposition New Slovenia (NSi) also said it would support the changes. However, the party wants a more comprehensive approach by the government, for example reduced VAT for basic necessities, above all food, MP Jernej Vrtovec said.

The NSi wanted to file an amendment under which the VAT reduction would also apply to food and beverages. But because the changes address VAT reduction for energy products, the amendment was not discussed.

All three coalition parties expressed support for the changes, but junior coalition parties expressed some misgivings.

The Social Democrats (SD) said a reduction to 5% would be a maximum expense for the public finance and would prevent any later additional actions.

SD MP Soniboj Knežak regretted that a solution had not been found for heating oil. "I don't know if that was a bureaucratic lapse," he said about the EU directive and expressed the expectation that a solution will be found at the EU level by the start of the heating season.

Meanwhile, Miha Kordiš of the Left underlined the need to regulate prices if the VAT cut is to have the desired effect. He also said the Left wanted to see regulation of food and heating oil prices, as well as a fair tax reform by the end of the year.

18 Aug 2022, 17:33 PM

STA, 18 August 2022 - The government confirmed on Thursday an aid package under which EUR 40 million will be disbursed to companies this year and next to help them cope with higher energy costs. Three different types of aid will be available, according to Economy Minister Matjaž Han.

EUR 20 million will be available this year and another EUR 20 million through mid-March 2023, in what Minister Han described as merely the first step in efforts to help the corporate sector.

Two types of aid respectively capped at EUR 500,000 and EUR 2 million per beneficiary will be available for the financing of higher energy costs.

This type of aid will cover at least 30% of electricity or gas costs provided that energy prices are at least twice above last year's average. A maximum of 30% of total costs can be covered.

A third type of aid is set aside for energy-intensive companies which will be eligible only if they are operating at a loss. In this case, up to 70% of their costs will be covered.

Companies that have access to regulated gas and energy prices - mostly small and medium-sized enterprises - are not eligible for the scheme, according to the government.

Han said the measure was in line with EU state aid rules and had been cleared by the European Commission. The bill will also be put to the Economic and Social Council, the country's main industrial relations forum.

"We've prepared this measure together with business and I'm glad that we concluded at yesterday's session of the business coordination committee that it represents effective aid to the corporate sector," he said.

The Chamber of Commerce and Industry (GZS) has already welcomed the aid scheme, describing it as "an appropriate measure considering the EU legal framework."

But it also noted that the aid will only suffice for the time being and said it expected additional aid in the autumn.

The aid package "does not address the major unknowns concerning the certainty of gas supplies or the very likely escalation of energy prices for business users next year," it said.

"In order for the economy to work as best as it can, it needs and expects a reliable supply of energy at acceptable prices."

18 Aug 2022, 17:16 PM

STA, 18 August 2022 - The government has approved a EUR 41 million package to help vulnerable households and individuals and the disabled get through the energy crisis this winter. Some 63,000 vulnerable individuals and 7,400 disabled will be eligible for one-off aid of EUR 200.

The package was presented at a press conference following the government's session on Thursday by Labour Minister Luka Mesec, who said EUR 27 million would be paid out this year and EUR 14 million next year.

He said the aid was targeted to help households at risk and the disabled. The former group includes some 54,000 recipients of welfare payments, including the working poor, and 9,000 pensioners whose income is so low they receive security allowance.

Mesec said the households comprising several vulnerable individuals would see the payments added up; a household that includes two individuals who are at risk or unemployed will get EUR 314. If they have a child they will get a further EUR 118 if the child is not included in organised care or education, and half that amount if her or she is.

The disabled will also get EUR 200 each. "If they live in a household that is at risk they will get the allowances they are entitled to as members of such households as well as the 200 euro allowance for the disabled," Mesec said.

"It is important that during the distribution period from 1 November to 31 March next year, we'll invite all those who are eligible for social aid but are not getting any to join the social security system. Analysis shows these are primarily people who live alone and are over 65 years of age. These are mostly women, many of whom don't not even know they are entitled to social aid or a security allowance," he said.

The one-off aid will be paid the same way as other welfare payments. The households will be able to spend the money whichever way they see fit.

09 Aug 2022, 16:21 PM

STA, 9 August 2022 - Ljubljana Mayor Zoran Janković has promised the residents they will be kept warm this winter despite the energy crisis. Coal reserves are sufficient to provide district heating to nearly half of all homes and there will be enough natural gas, but the question is at what price gas will be available.

Speaking at his weekly press conference on Tuesday, Janković said that some 61,000 apartments or 48% of all in the capital city are served by district heating. "We've got sufficient energy sources for the hot water pipeline throughout the heating season, even if it's cold from October to May," he said.

The share of biomass for district heating is to be raised to 20%. There are still over a month's worth of coal reserves with a shipment of 145,000 tonnes of Indonesian coal on its way to Slovenia, plus another such to follow in January, according to the mayor.

He is planning to meet Environment Minister Uroš Brežan later this month to discuss how the financial burden of emission coupons for the use of coal could be alleviated and to determine the energy sources for district heating.

Janković hailed the government's decision to cap prices of energy products, including district heating.

One out of three households in Ljubljana uses natural gas for heating. "We absolutely have the needed quantity of gas secured," Janković said. If necessary, the use of gas will be reduced with industry rather than households. However, he also said it was too early to say how much gas will cost.

The construction of a new gas-steam unit at the Ljubljana CHP Plant is slated for completion in late September. Janković expects it will be ready for a trial start-up in October, by which time it should be clear what happens with gas supplies.

"We need 170 million cubic metres of gas for Ljubljana, which is a negligible amount relative to European consumption." At the moment, the city authorities are negotiating with three suppliers. Another option is heating oil.

The mayor reasserted his case for a waste-to-energy plant, which he said would make Ljubljana 70% self-sufficient if built in five years. "I promise that, if we get the concession, our incinerator will be the most advanced with minimum emissions and a chimney above the temperature inversion zone," he said, adding that heating for end users would be 20% lower than now.

04 Aug 2022, 10:20 AM

STA, 3 August 2022 - After a week-long shutdown due to low water levels of the Soča river, the Solkan Hydropower Plant is again operational as of Tuesday afternoon, its operator Soške Elektrarne Nova Gorica (SENG) announced on their website. The plant is operating within the currently available flow of the river.

Hydrological conditions on Monday did not yet allow for the turbines to function safely as the Soča's water levels were extremely low. The company then said that the plant would be put into operation as soon as conditions improved.

SENG told the STA today that it was able to relaunch the Solkan power plant following rainfall in the Bovec area, upstream from the power plant.

The Environmental Agency has meanwhile said that a number of small hydro power plants on Soča's contributories were currently running with restricted capacities.

The shutdown caused production losses, SENG told the STA recently. The Holding Slovenske Elektrarne power utility compensated for this by restructuring production within the group and by buying additional electricity on the stock exchange.

The Solkan hydropower plant was shut down last Wednesday for the first time since 2003.

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