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SDE leader: Loans needed to allow for energy price support to business

Minister of the Interior Lauri Läänemets (SDE).
Minister of the Interior Lauri Läänemets (SDE). Source: Siim Lõvi/ERR

Measures aimed at mitigating rising energy prices, if applied to businesses as well as domestic consumers, will need to be supported by the state taking out loans, the Social Democratic Party (SDE) says.

The party's leader, and interior minister, Lauri Läänemets, said: "This will mean a fundamental change in Estonia, whereby nowadays, we will be taking more loans.

"Essentially, we are creating a bigger deficit for the country, which would nullify the inflationary component of prices," Läänemets went on, noting other European countries do likewise, and invest in their people.

Suppot measures planned for aiding domestic consumers of both electricity and natural gas could also be replicated, as far as possible, for business, via loans, Läänemets went on, noting that some degree of prioritization would be needed in the event of shortages.

He said: "We could offer certain companies significantly cheaper electricity, but if this is not enough for everyone, if Eesti Energia does not have the capacity, then some kind of choices should be made. In the case of gas, there are two ways to influence the price, namely via an excise tax or a price ceiling."

The proposed natural gas support measure to households sets a consumption limit, beyond which support cannot apply, rather than a price cap.

Mart Võrklaev, Reform Party chief whip, said that the party's MPs must meet with those of coalition partners, to discuss measures. "My personal feeling is that the biggest problem we have today is with natural gas, that is, the price of gas has risen to heights, while there are a lot of companies that use gas. Regarding electricity, I recognize those companies which have already fixed their prices, meaning, I think that this helps manage risks," Võrklaev said.

Isamaa leader and MP Helir-Valdor Seeder has said that support measures for electricity bills should be applied to firms, while a price cap could be installed on natural gas to companies.

These measures would particularly apply to small-to-medium enterprises, since large commercial consumers of gas cannot receive support without EU approval, though, given the current prices, this should be feasible too, Seeder said.

"If we also permit entrepreneurs to use a universal [electricity] service that is controlled by the Competition Authority and which includes ... CO2 quota prices, this will also guarantee entrepreneurs a stable, predictable price, which does not depend on stock market fluctuations," Seeder went on.

Mart Võrklaev also suggested a natural gas price cap, or the use of shale oil as an alternative, and noted that in any case Monday's coalition council meeting will render things clearer, from his party's perspective.

He said: "We borrow every year, while the state budget discussions are currently ongoing. In the course of the process, it will become clear how much we have to borrow next year, and for the following four years."

The 2023 state budget and the four-year state budget strategy are at cabinet level at present.

The government is likely to present the 2023 state budget bill to the Riigikogu at the end of this month, with a view to it passing its three readings (substantive amendments can be made between the first and second reading) and processing via Riigkogu committee and debating in the chamber, by the second week in December.

The Riigikogu returns from its summer recess in mid-September and works to mid-December.

Reform has traditionally been circumspect about borrowing, a stance which led to tensions with its erstwhile coalition partner, the Center Party.

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Editor: Andrew Whyte

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