Government not planning to compensate large companies for energy costs

Kaja Kallas.
Kaja Kallas. Source: Stenbocki maja

The government is not planning to create subsidies for large companies struggling with rising energy costs, Prime Minister Kaja Kallas (Reform) said on Thursday. The first priority is to support people during the difficult winter.

It must be taken into account that Estonia's electricity production capacity is approximately 1,000 megawatts less this year than last, Kallas told "Aktuaalne kaamera".

She said demand must fall.

"It is not something that happens overnight. If we continue to support everyone's electricity consumption at full capacity, we will simply not have enough. If there is no more supply, demand will have to be reduced. We can cushion the shocks, but we can't completely smooth them out, it's just not possible," said Kallas.

The government has implemented a new universal electricity service for home consumers and small businesses, limiting the price, but large companies are excluded from the system.

This week data showed exports have fallen and companies blame rising prices and a lack of government support.

While other countries are subsidizing businesses for their high costs, enabling them to keep prices down and competitive in a global market, the Estonian government has chosen not to do this.

Entrepreneurs in the wood and metal industry say they are seeing orders decline and expect more layoffs in the coming months if no help is offered. Today, it was reported redundancies have already been made in the manufacturing sector.

Bakeries told Wednesday's "Aktuaalne kaamera" they are in a similar situation as the prices of raw ingredients continue to rise.

Minister of Economic Affairs Riina Sikkut (SDE) said in August that by reducing consumers' energy spending with the universal electricity service they will have more money to spend elsewhere, which will help businesses.

But prices of everyday items, such as food and fuel, have also risen steadily over the past year. Estonia's inflation has been above 20 percent since May but has now started to fall.

In a speech last month, Kallas encourage people to "live more sparingly" this coming winter.


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Editor: Marko Tooming, Helen Wright

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