The government has adopted the Act Governing Aid to Businesses for 2023 in the amount of 1.2 billion euros
The government has adopted the Act Governing Aid to Businesses today to mitigate the consequences of the energy crisis. Aid to businesses includes subsidies due to high prices of electricity, natural gas and technological steam, subsidising two job preserving measures and measures aimed at ensuring the liquidity of companies. The estimated total aid amount of all measures is 1.2 billion euros.
Due to the high energy commodity prices, the government shall aid businesses in 2023 in subsidising high electricity, natural gas and technological steam prices, two job preserving measures as needed, and ensure favourable loans for the best possible liquidity of companies. With the regulation of energy commodity prices, which was adopted last week, and the Act Governing Aid to Businesses, adopted today, the government intends to provide the most competitive energy commodity prices to Slovenian companies and a predictable and stable business environment.
The measure of co-financing the high energy commodity prices has been prepared on the basis of the new EU Temporary Crisis Framework, whereby the European Commission considered Slovenian proposals in its preparation. Similar to the aid of the current year, it therefore includes several improvements for the benefit of the Slovenian economy.
Based on this year’s aid, the government increased the maximum allowed aid and ensured more funds. It added two new aid types to the already existing ones, and loosened the entry requirement from 2 to 1.5-times the increase of prices in 2023 compared to the 2021 average. Requirements for energy-intensive companies have changed. Following the discussion of the law at the Economic and Social Council, the government reviewed the proposals of its social partners.
The government considered the proposal of the economy for the mitigation of requirements in the special aid for poor economic performance, namely that the EBITDA of the eligible entity that received no aid in the eligible period should be reduced by at least 10 per cent compared to 2021, and that the entity’s EBITDA should not exceed 90 per cent of its EBITDA in 2021 in the eligible period, including total received aid. This requirement is a deviation from the current EU rules; therefore, the latter must still be approved by the European Commission.
For temporary lay-offs, it also loosened the requirement of investments into the green transition. Entities will now need to invest half of the received funds for the aforementioned measures within the next 30 months.
The total financial value of the measures meant to aid the economy for 2023 and partially for 2024 is estimated to around 1.2 billion euros. Up to 850 million euros have been allocated to the measure of co-financing the high prices of electricity, natural gas and technological steam, 100 million euros for co-financing the measures of part-time work and temporary lay-offs, and 250 million euros for improving the liquidity of companies.
The measure of co-financing high energy commodity prices
The government shall subsidise the payment of high energy commodity prices of eligible entities in the period between 1 January and 31 December 2023. The plan needs to be approved by the European Commission. Companies, private entrepreneurs, economic interest groupings and cooperatives, private institutions, societies, chambers and unions will be able to submit a request for aid, whereby the pre-requisite is that every entity is engaged in an economic activity. Small commercial users shall not be eligible for the aid because these already have a regulated electricity and gas price in place, and neither will entities engaged in finances and insurance activities; hence, the proposed act does not differ from the present measure. Legal entities and natural persons with outstanding liabilities to the government up to 50 or more euros or who are in the bankruptcy or liquidation process shall also be unable to request for aid. Applicants must not be under any sanctions adopted by the European Union due to the Russian aggression against Ukraine.
Eligible entities will be able to request for aid between 40 and 80 per cent of the eligible costs, namely over 1.5-times the price increase of electricity, natural gas and technological steam in 2023, and the price comparison will be calculated based on the average price in 2021. The proposed act defines the maximum permitted average electricity, gas and steam prices for 2021 for simple aid. Should the eligible entity have a lower average price, then they shall request for the latter. In simple aid calculations, the actual volume of the used energy commodity in 2023 shall be taken into consideration, whereas 70% of the consumed energy commodity value in 2021 shall be considered for special aids. The price per unit of the energy commodity in 2023 to which subsidy shall be applied amounts to EUR 510 for electricity and EUR 160 for natural gas. The total maximum allowed aid for the same costs and period can therefore range between 2 million to 150 million euros per eligible person. For eligible persons entitled to over 4 million euros of aid, i.e. one of the special forms of aid, the Government of the Republic of Slovenia shall decide on the allocation of such funds.
An eligible person will only be able to exercise one type of aid among five. Under the simple aid plan, the eligible persons will be compensated 50% of the eligible costs or up to 2 million euros of total aid. Aid in agriculture shall be lower, i.e. up to 250,000 euros, and up to 300,000 euros in the fishing industry.
The proposed act also differentiates between four types of special aid. The basic special aid can therefore amount up to 50% of the eligible costs and up to 4 million euros of total aid, special aid for poor economic performance 40% of the eligible costs and up to 100 million euros, special aid for energy intensive companies 65% of the eligible costs and up to 50 million euros, and special aid in special sectors 80% of the eligible costs and up to 150 million euros. With special aid, received aid under the temporary frame of all the subordinates and parent undertakings are added together. The proposed act shall also define additional requirements for each aid category.
Despite the fulfilment of the entry threshold of 1.5-times of the increase, the eligible entity shall not be entitled to receive the special aid should their price per unit be lower than EUR 150 for electricity and EUR 79 for natural gas in 2023. The eligible entity must also inform SPIRIT Slovenia in the event of their selling any excess energy. If excess energy is sold at the price that is lower than the agreed price with the suppliers as per this agreement, then the entity shall not be eligible to receive aid for that part.
The eligible entity must complete the digital form in the application of SPIRIT Slovenia by 12 noon on 28 February 2023.
The first pay-out shall be made by the end of March 2023 and will comprise of the aid of 80% of the estimated aid value for the first trimester (January–March). Regular monthly pay-outs shall follow in the amount of 80% of the estimated aid value for each month. Eligible entities will be able to receive the remaining 20% of aid by with the settlement of the actual costs in February 2024, providing the actual costs are higher than the aid paid out during the year. The aid may be paid out up to the maximum allowed value indicated in the form. If a company incurs lower costs compared to the received aid during the year, then the company will need to repay the difference and return the funds to the national budget.
An important difference compared to the economic aid for 2022 is that the process is simpler for the businesses in terms of bureaucracy because no invoices will need to be provided as proof on the costs of energy commodities. SPIRIT Slovenia shall namely review the volume and price per unit of the energy commodities of the eligible entities with operators and suppliers of energy commodities. Eligible entities will only select the type and amount of aid calculated with the help of the published calculator in the application, and agree with the statements that stem from the act.
Co-financing job preserving measures
The proposed act also includes two job preserving measures, namely the temporary measure of a partial salary reimbursement due to part-time work and the temporary measure of a partial salary reimbursement to workers who were temporarily laid off. Both measures will allow the eligible employers to engage in part-time work or to temporarily lay off a worker, whereby the worker will be eligible to the reimbursement of their salary as per the provisions of the Employment Relationships Act. The aspect of the maximum preservation of workers’ rights has been considered.
The measure of a partial salary reimbursement due to part-time work could be of benefit to an employer between 1 January and 31 March 2023 who is eligible or would be eligible to receive economic aid as per the Act Governing Aid to Businesses, providing that the employer cannot ensure 90% of work for at least 30% of their workforce. The measure will allow the employer to impose part-time work at the partial temporary lay-off of a worker who has a full-time employment contract concluded with the employer – due to the temporary inability of ensuring work for business reasons, by having the employer provide work for the employee on a part-time basis at least. The eligible employer will receive 80% of the paid-out salary reimbursement to the worker (gross amount), and the reimbursement amount will be limited with the average monthly salary amount for the month of October 2022.
The measure of a partial salary reimbursement to workers who were temporarily laid off will be available to employers from 1 January to 30 June 2023 for the period of 30 days, providing they are eligible or would be eligible to receive economic aid as per the Act Governing Aid to Businesses, with the additional requirement that funds in the amount that correspond to half of the received funds from the aforementioned measure shall be invested into the green transition within 30 months. The eligible employer will receive 80% of the paid-out salary reimbursement for the temporary lay-off measure, and the reimbursement amount will be limited with the average monthly salary amount for the month of October 2022.
The employer will need to consult with the union or the workers’ council prior to adopting the decision to impose temporary part-time work or lay-offs, on the scope of work, the number of employees affected by such work, and on the duration of such a measure. They will also need to obtain a written opinion of a body that represents workers’ rights. The employer will be able to impose part-time work or temporary lay-off each employee in the eligible period (from 1 January to 31 March for part-time work and from 1 January to 30 June 2023 for temporary lay-offs). The worker’s salary for when they are actively working, as well as the reimbursement of their salary, must not, in total, be lower than the minimum wage in the Republic of Slovenia.
Employers will be unable to terminate employment contracts of employees who were imposed part-time work for business reasons for the duration of the partial salary reimbursement and an additional six months after the aforementioned period. In addition, employers will be unable to terminate employment contracts to a larger number of workers for business reasons.
Measures aimed at improving company liquidity
The proposed act also includes favourable loans aimed at improving the liquidity of companies. The Slovene Enterprise Fund and the Slovenian Regional Development Fund shall allocate 30 million euros in 2023 and 20 million euros in 2024 for the measure of favourable loans.
Together with the Ministry of Economic Development and Technology, SID bank will also offer favourable loans in the amount of 150 million euros, which will be meant for investments and current assets.
In cooperation with the Ministry of Infrastructure, SID bank will allocate approx. 50 million euros for financing the economic activity of road carriers during the energy crisis.
Source: Ministry of economic Development and Technology