Companies dependent on gas want state aid

The Estonian end of the Balticconnector gas pipeline in Paldiski.
The Estonian end of the Balticconnector gas pipeline in Paldiski. Source: Siim Lõvi/ERR

The price of natural gas has grown more than tenfold over the past year, while gas-intensive industry has seen little in the way of alleviation. High energy prices are keeping salaries down and Estonia is losing its competitive edge over the Nordics where energy costs much less.

Companies are trying to dial back gas consumption, while that is not always possible.

"We use natural gas for heating and our powder coating production line. It would be hugely expensive to switch to another technology, said Herki Hälvin, head of Kitman Thulema.

The company is the leading manufacturer of commercial fittings and decorator of public buildings Estonia, with 25 percent of its production exported.

"We paid €5,200 for gas last January versus €59,000 this year. That's a hike of 11 times. We would like to help our employees cope with inflation and hike salaries, but it is very difficult to do in the condition of soaring energy prices. We are also losing our competitive edge over the Nordics. While they have higher salaries, energy costs less there," Hälvin said.

Gas expenses have also grown for bakers Pagaripoisid.

"Gas costs have gone from €3,000 to around €100,000. But it's difficult to say where to find that money as people's expenses are also going up," CEO Meelis Pärn said, adding that the company has been barely breaking even lately.

Estonia's combined gas consumption has been around five terwatt-hours, while the Estonian Gas Association believes that could drop by 20 percent this year. 40 percent of gas is used in heating, 40 percent in industry and up to 20 percent by private consumers.

Industrial companies have not received compensation for the price of gas from the government.

"While it's true that no one refuses benefits, we have not been compensated in any way this year. There was a one-off measure when the coronavirus crisis began. We have managed to stay afloat, even though we had to close our cafes that put a major dent in our operations," Pärn said.

"The government should lay down a price point anything on top of which fetches compensation," Hälvin suggested in terms of energy prices.

Minister of Economic Affairs and Infrastructure Riina Sikkut said the government is aware of companies struggling because of high energy prices.

"There is no agreement in terms of who should be compensated for what. These debates will happen as part of state budget negotiations, alongside other prospective expenses. We could know something in three weeks' time at the earliest."


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Editor: Marcus Turovski

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