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Measures to mitigate price increases

Simbolična fotografija, električno omrežje
The Government of the Republic of Slovenia is aware of the severity of international developments and their impact on the domestic environment. To this end, it is drafting a comprehensive package of mitigation and target-oriented measures regarding high food and energy prices in cooperation with key stakeholders.

The strategy to tackle high food and energy prices is designed in three pillars: energy, food and food chains, and measures for vulnerable groups and families.

The Government first provided for the needs of individual households and small enterprises. These were followed by target measures for medium-sized and large enterprises. The common thread of all the measures adopted is the formation of a predictable and safe environment for consumers, the business sector and the state.

Measures to mitigate high energy prices

To manage high energy prices, the Government adopted measures to mitigate prices and measures for a reliable supply. Within the framework of the latter, a greater application of solar architecture throughout Slovenia is planned.

Measures to mitigate the high prices of energy products

For the time between 1 September 2022 and 31 August 2023, the Government determined the maximum resale price of electric energy for households and small business customers, and defined the maximum resale price of natural gas for protected customers. By limiting the margin of all traders with petroleum derivatives, the Government limited the prices of oil and petroleum derivatives on the motorways and of the fuel oil.The Government maintained a lower excise duty for electric energy and natural gas. For the period between 1 September 2022 and 31 May 2023, the Government lowered the VAT rate to 9.5 per cent for electric energy, natural gas, district heating and firewood. As of 1 September, a lower contribution for assuring support to production of electric energy from renewable sources and from cogeneration with high efficiency (RES + CHP contribution) applies.

The Government will help small, medium-sized and large enterprises between 1 June and 31 December 2022 by co-financing the costs of electric energy and natural gas above a double increase of their prices. The amount of support depends on a company’s changed situation as per the prices in 2021 and 2022. Small and medium-sized enterprises are eligible for support in the amount of up to 50 per cent of eligible costs and large enterprises up to 30 per cent of eligible costs. When proving operating loss, energy-intensive enterprises will be able to apply for the reimbursement of up to 70 per cent of eligible costs; the highest amount of aid is EUR 2 million. The Government also earmarked EUR 6 million for favourable liquidity facilities for small and medium-sized enterprises affected by the crisis. The total estimated value of measures to help the business sector amounts to EUR 86 million. Slovene Enterprise Fund published a package of favourable crisis liquidity facilities in the amount of EUR 32 million. Micro, small and medium-sized enterprises experiencing liquidity problems due to the consequences of the COVID-19 epidemic or crisis situation relating to the energy supply will be able to obtain up to EUR 100,000 worth of favourable loans.

The Government also enabled more favourable taxation of the reimbursement of travel expenses to and from work.

Measures for security of supply

The Government adopted the legal basis for the adoption of temporary measures in the event of an increased risk in energy supply (a lower or higher risk level may be declared in case of disruptions in energy and gas supply) and measures for the security of energy supply. The Act governs the storage of gas, release of mandatory reserves of oil and petroleum products and exceptions when attaining efficiency indicators of the district heating system.

Measures adopted to reduce import dependency:

  • promotion of self-sufficiency,
  • the Government may limit the lighting and heating in public buildings and buildings where the public congregates,
  • customers of natural gas have the right to not be connected to the natural gas distribution system if they use renewable energy sources for heating,
  • customers who choose voluntarily to reduce their gas and electric energy consumption by 15 per cent will be rewarded.

The Government ensured mandatory and alternative gas supply for protected customers (households, kindergartens and schools, hospitals, secondary school and university dormitories, retirement homes, prisons, etc.), who could suddenly be left without a supplier or offer of a new supplier. 

To provide for a stable gas supply, the Government adopted the guarantee act for obligations of the companies GEN energija, HSE and Geoplin to ensure their liquidity.

Careful management of energy products

The EU Council adopted the regulation on coordinated demand reduction measures for gas in the period from 1 August 2022 to 31 March 2023 by 15 per cent based on average consumption over the last five years due to the risk of further interruptions in the gas supply from Russia. The Energy Agency calls on the customers to use energy more rationally and seek solutions for replacing gas with other energy products.

To this end, we are drafting an action plan with various scenarios on how to abandon the use of natural gas of Russian origin by 2025.

For the state authorities to set an example, the Government bound the central state administration to rational use of energy: the premises are not cooled to less than 25 °C and not heated to more than 20 °C during the heating season.

Promotion of green transition

The Government’s objective is for all Slovenian households to be fully independent from fossil fuels in their energy supply by 2030 and have their own, long-term energy source. The Government plans a process of greater utilisation of solar power or to accelerate the construction of solar power plants in Slovenia. We are also preparing measures that will enable one third of Slovenian households to have access to community solar power plants.

Measures to mitigate high food prices and ensure food security

As a Member of the European Union, Slovenia is involved in the adoption of measures to mitigate price increases and ensure food security at the European level. In addition to implementing European measures, Slovenia is also adopting additional national measures that are compliant with the treaties and rules at the European level. These rules permit the EU Member States to, at the national level:

  • reduce VAT rates,
  • encourage retailers to maintain low prices,
  • use EU funds intended to aid the most deprived.

Mitigation of high food prices

The increase in food prices is linked directly with the increased costs of producers due to the price rise of fuels, electric energy, raw materials and intermediate goods. The Government’s measures are thus intended not only for consumers, but also farmers, agricultural holdings and commercial fishermen. 

In 2022, the Government will earmark EUR 22.3 million for agriculture and fisheries (subsidies for fuel and fertilisers, purchase of intermediate goods, assistance for the dairy sector), of which more than EUR 1.7 million will be from the European funds. Some EUR 7.5 million (EUR 5.2 million from the European funds) of aid will be paid in 2023. 

Within the framework of support for the business sector, the companies involved in aquaculture will be able to obtain state aid as per the Temporary Framework of up to no more than EUR 72,000 per an individual company.

In addition to the measures for agriculture and fisheries, the Government also adjusted the taxation of reimbursements of employee expenses for food to mitigate high food prices. The Government ensured that the price of lunches and accommodation of students in secondary school and university dormitories in the 2022/2023 academic year is not increased as per the previous academic year and the difference will be covered from the budget.

To encourage retailers to maintain low prices, the Government defined a basket of basic food groups. With the publication of their prices, the Government wishes to inform consumers and enable them to monitor and compare retail prices at various providers.

Measures for vulnerable groups and families

With the increase of prices of energy products and food, the social distress of citizens also grows. With additional measures, we wish to prevent the price increases from deepening the distress of the most vulnerable groups.

Energy allowance

This measure ensures better social security of the socially most vulnerable groups of citizens. The energy allowance will be paid out to the recipients of financial social assistance and income support, i.e. in the amount of EUR 200, whereby the amount of the allowance increases in accordance with the number of children in a household. 

Energy allowance is a one-off payment. To be eligible for energy allowance, an individual or a family will have to be in receipt of a valid decision on financial social assistance or income support in the period between 1 August 2022 and 31 March 2023. The allowance will be received by approximately 71,000 individuals and families.

In order to expand the circle of beneficiaries for the allowance, the assets of new applicants for financial social assistance or income support will not be observed when establishing their eligibility. Households will thus receive the allowance if they become eligible for financial social assistance any time between October 2022 and March 2023.

The energy allowance in the amount of EUR 200 will also be paid out to the weakest categories of disabled people in terms of income. Some 13,500 persons will receive the allowance. 

These measures are assessed to be worth EUR 35 million.

Dearness allowance for recipients of child benefit

This measure will help families that are entitled to child benefits. In addition to child benefit for each child, these families will also receive a dearness allowance in November and December 2022 and January 2023. 

The dearness allowance in the amount of the child benefit for the first child will be paid out to eligible families in accordance with their income class. A family will receive the allowance for all the children in the family. If a family is in the first income class and has three children, it will receive a dearness income in the amount of EUR 368.37 (i.e. three times EUR 122.79). 

To be eligible for the dearness allowance, a family will have to be in receipt of a valid decision on child benefit for October/November/December 2022. The filing of applications will not be necessary as the payments will be executed automatically.

More than 353,000 children will receive additional funds by means of this measure and the Government will earmark EUR 63 million for this purpose.