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The Prime Minister provides additional information in the National Assembly about the hike in energy prices and other goods in Slovenia

Today, on the second day of the 27th regular session of the National Assembly, Prime Minister Janez Janša gave an additional explanation on the answer to Bojana Muršič’s parliamentary question about the increase in the prices of energy and other goods in Slovenia. The decision on the debate was adopted by the National Assembly at its 26th regular session.

In his explanation, Prime Minister Janez Janša emphasised that the rise in energy, food and other prices is currently one of the pressing issues not only in Slovenia and in Europe, but also on a global scale. “This is partly related to the green transition and partly to the large amount of money that has been printed for the post-epidemic recovery. While Slovenia cannot influence most of these reasons with its instruments, it can influence some of them.”

He went on to point out that fuel was not liberalised by this Government, but was mainly liberalised in the spring of 2016, including heating oil, with only a small fraction remaining unregulated. “The basis for the price of fuels is the purchase of crude oil or basic energy product, on top of which there are various duties largely related to the environment.” Margins that can be partially influenced by the Government through regulation range from six to seven per cent of the price. “The Government took action regarding the margins for heating oil because we found that these were increases that went above the pre-deregulation level.” The Government took this measure, but the effects were not what some expected. “Energy prices are currently by far the most affected by dramatic price increases in natural gas and partly oil, and the higher the proportion of gas being used as a basic energy source in the structure of electricity production, the more the price increases.” He said that price increases in Slovenia are not very high yet or even practically non-existent for direct customers, i.e. households. He pointed out that, given the expiration of energy supply contracts, certain rises will definitely occur at the beginning of next year, and that the bigger problem is industrial consumers, and that the Government will react then. “A working group of secretaries of state is preparing a set of measures and the Government will adopt them according to the situation at the time.”

Further into the debate in the National Assembly, the Prime Minister responded to some of the deputies' statements. He noted that the Government is addressing the just transition at the level of the European Union, that the Just Transition Fund was created as an instrument for addressing these problems, and that funds are available for this, which will also be used by Slovenia. He reiterated that the present Government did not liberalise the price of fuel, except in a small part. “You liberalised fuel prices in 2016 when the Social Democrats were very much a part of the Government. You have liberalised all prices, including the prices of heating oil, with the exception of diesel and 95 octane petrol on motorways. Only that remained regulated and even that was liberalised last year. I have to add that we have now re-regulated heating oil margins. You liberalised all of that, not us. It is interesting, however, how some parties that consider themselves liberal are advocating a hundred per cent regulation on this podium today, which doesn’t make any sense. It is also nonsense to say that the liberalisation of the prices of diesel and 95 octane petrol on motorways last October has led to a 47 percent increase in retail prices.”

The Prime Minister went on to emphasise that margins represent between six and seven per cent of prices, while the rest is the price of the basic raw material plus other taxes, including environmental taxes. That liberalisation has nothing to do with the 47-per cent increase. “Where we found that liberalisation contributed to the rise, as was the case in heating oil, we re-introduced regulation.” He noted that the discussion was full of inaccurate examples of what was done in other countries. “Look, the fact that the European Commission proposed this set of measures is also thanks to us; we put pressure on it to do so.” He said that the main reason was not what was happening in Slovenia, but what was happening in Spain and in some other countries where long-term gas contracts expired and new contracts were four times more expensive. This immediately spilled over into the price of heating and resulted in a drastic jump in prices. Measures cannot be the same where prices have risen by 400 percentage points and where they have risen by only 30 percentage points. He pointed out that the fact that 254 thousand people in Slovenia live below the poverty line is statistical and does not say anything about the actual situation. "Before deregulation, fuel margins for petrol, diesel and heating oil in Slovenia were 76 per cent of the European average for petrol, 63 per cent of the European average for diesel and 51 per cent of the European average for heating oil. We are far lower compared to what others had."

The Prime Minister added that the key point is that the reasons for the increase in energy prices fall mainly into three groups. The reasons for the increase in consumption and the decrease in production of energy from renewable sources can be natural. Natural phenomena such as drought, lack of wind in northern Europe and longer winters have led to an increase in energy consumption and a simultaneous decrease in the production of energy from renewable sources. “Some of the measures of the green transition, i.e. the transition to a carbon-free society, have already been put in place. The issues in the energy sector have been further exacerbated, because if it is not clear how much something will be taxed, then investments are not made in these resources. The economy reacts to the situation as it is. This did not and still does not help in this situation. The ongoing dilemmas here are whether natural gas and nuclear energy will be included in the green part of the transition or the carbon part of the transition, i.e. the non- sustainable part, and on this depends what the duties will be, what the price will be and, consequently, what the investments will be and how the member states will seek to resolve their national balances. On the other hand, of course, energy consumption has increased during the recovery from the epidemic.” The European Union has printed a lot of money, with even more money being printed by the United States and China, which is printing money continuously. The United States is buying up all the gas supplies that are on the market at the asking price, paying as much as suppliers are asking for. This, of course, also has an impact on the supply of other markets. According to the Prime Minister, this situation is not going to improve significantly, and we must therefore count on a tough winter when it comes to energy supplies and energy prices. At the EU level, there are currently discussions, coordination and clashes are taking place on how to proceed with the further taxation of non-electric cars and buildings. “If the taxation of these two things is not delayed, then this will have a further impact on rising prices, and I hope that we will be able to convince the fundamentalists here, who talk about the climate crisis and want to declare it and so on, that this comes at a price, and that a decision has to be made as to whether to pursue this transition in such a way that it is sustainable and just, or in such a way that we show the world good figures in Europe and end up destroying our industry and impoverishing our population. Keep this in mind when you advocate two contradictory courses in the same breath.”

Further into the debate, the Prime Minister reiterated that the Government had set up a working group to monitor the situation and had proposed measures to introduce energy vouchers, but that before doing so, it was necessary to know what the other frameworks were, and to whom and how they would be allocated. “I hope that the budget debate will be concluded in a productive way and that these frameworks will be adopted. As for the question of who will receive the vouchers, we can only use the instruments we have.” On fuel, where the figures are higher than they were a year ago, the Prime Minister said we should bear in mind that oil prices were negative on the world market a year ago. For the reasons already mentioned, this situation is completely reversed today. He went on to say that the solutions that the government had at hand were not to freeze margins and that the government could cut taxes. “Will you vote to reduce VAT and environmental taxes on fuel? But that means that there will be a hole in the budget and that there will be no money for many other things that vulnerable groups also need. A decision has to be made here. But there is room for manoeuvre here, because duties, including environmental duties, probably account for half of the price of fuel.” He also noted that there are reserves and they could lead to lower or no increases in prices. That there are huge salaries and bonuses for directors in state-owned energy companies. “Now you have to decide whether you are now all Robert Golob or whether you are one of those who are at risk because of these high prices. You can’t be both. And I have to say by the way, in 30 years I have never met a poor Social Democrat. So this what we are hearing here is a bit too demagogic.”

The Prime Minister pointed out, however, that there is another problem, namely that other commodities, including food, are also becoming more expensive. “When we are discussing how much money to allocate to alleviate the hardship caused by the rise in energy prices, it is important to realise that this is not the only problem on the table, and that some reserves must be left for other things as well.” The Prime Minister concluded the discussion by saying that the conversation would be continued, that the Government would take action, and that the less demagoguery in the debate, the more effective the action would be.