ZAGREB, 22 July 2022 - The Croatian Employers' Association (HUP) on Friday called on the government to adopt a new aid package for the enterprise sector because of an enormous rise in energy prices.

Employers are recommending four measures - to limit the price of electricity to up to €150 per megawatt-hour for all economic operators from 1 August this year to 31 December 2023; suspend from 1 August 2022 to 31 December 2023, or permanently reduce grid use charges and excise taxes; temporarily reduce charges for renewable energy sources; and reduce the income tax base by the amount of the increase in the cost of electricity for businesses compared with 2021.

"Despite the further rise in energy prices and the deteriorating state of the economy, Croatia has still not expanded its initial package of measures adopted in February, especially in regards to significant increases in prices of electricity, which is the primary source of energy for the majority of enterprises," HUP said.

It added that the enterprise sector expects further government interventions because it cannot cope with further increases in energy prices on its own any more.

Employers warned that failure by the government to mitigate the rise in electricity prices would jeopardise not only the operation of individual companies but also the growth of the entire economy.

"Without the government's intervention, enterprises will be compelled to considerably increase the prices of their products and services, which, in the present circumstances of galloping inflation, will have an additional and significant impact on the general inflation rate," HUP said, noting that the measures they are recommending do not require any direct allocations from the budget.

The enterprise sector is willing to invest in energy efficiency and renewable energy sources, but the government needs to change the present legislative framework to make it stimulating enough for companies, HUP said.

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ZAGREB, 26 March 2022 - The heads of state or government of the European Union's member states, who on Friday concluded their two-day summit meeting in Brussels, tasked the European Commission to propose an efficient solution to electricity price hikes.

The European Council calls on the European Commission "to submit proposals that effectively address the problem of excessive electricity prices while preserving the integrity of the Single Market, maintaining incentives for the green transition, preserving the security of supply and avoiding disproportionate budgetary costs," according to the Council's conclusions.

The Council of the EU and the European Commission are called upon "to reach out to the energy stakeholders, and to discuss, if and how, the short-term options as presented by the Commission (direct support to consumers through vouchers, tax rebates or through an "aggregator model/single buyer", State aid, taxation (excises and VAT), price caps, regulatory measures such as contracts for differences) would contribute to reducing the gas price and addressing its contagion effect on electricity markets, taking into account national circumstances."

After the discussion on the excessive energy prices, which took several hours, Croatian Prime Minister Andrej Plenković said that it was difficult to find a single solution which would suit all the member-states, having in mind that some of them are highly dependent on Russian Russian gas, oil and coal imports.

The EU has three goals: to ensure new supply routes for gas, complete and improve the gas and electricity interconnections throughout the Union, and provide direct support to consumers, he added.

ZAGREB, 16 Oct, 2021 - Prime Minister Andrej Plenković said on Saturday that his cabinet would not allow a decline in the living standards of the Croatians due to the energy prices, now when the funds for the post-coronacrisis recovery were secured.

Visiting the agriculture ministry's fair promoting the Croatian farming sector in Zagreb, PM Plenković reassured the general public that in the event of a further rise of the energy crunch prices, there were additional tools available to his government  to use them to calibrate the prices in the country.

He underscored that the internal discussions in the government and also their talks with international partners over the last two months had been focused on the energy prices, including the trends in prices of electricity and natural gas.

Regarding the prices of gas supplies and electricity, Plenković said that "the situation is stable in Croatia" and that the country "is in a much better position than many others."

Concerning petroleum products, since 2014, fuel prices in the country have been fully defined by the market, he recalled.

Until the latest developments considering the fuel prices globally, the government had never applied Article 9 of the Law on Petroleum Products that envisages the adoption of a decree on capping the prices, Plenković said.

That article stipulates that only in exceptional circumstances, the government can determine the maximum retail prices of fuels for a period no longer than 90 days in order to protect consumers or for some other justified reasons.

On 14 October, the government passed a decree limiting the retail price of petrol to HRK 11.10 (€1.48) per litre and the price of diesel to HRK 11.00 (€1.46) per litre for the next 30 days.

Plenković today explained that the government had opted for that interventionist move when it found that the conditions were met.

"We managed to overcome the biggest health, economic and financial crisis and consequently avoided the potential biggest social crisis in the last 600 days, without large-scale lay-offs and without a series of bankruptcies and social fractures, while all the state services continued to  function as usually, and we managed to retain the country's investment rating and good reputation  on the domestic and international financial markets, with a clear roadmap for Croatia's accession to the euro area. Therefore, we will not let  a decline in the living standards of our citizens due to the energy  prices, now when we managed to ensure funds for the economic recovery," Plenković said.

Describing the government's response to the energy crunch prices as agile and prompt, he added that in the event of the escalation, his cabinet had additional tools at its disposal to address the situation.

He said that he expected energy producers and distributors to assume a part of the burden. "I believe that they are sensible. They are not the companies that cannot endure such burden on their margins and or that it would adversely affect their business," he said.

He added that the government would follow the developments in the period to come and that the next moves would be considered in three week's time before the expiry of the current 30-day price limiting.

Asked by the press about aid to agricultural producers faced with high fuel prices, Minister Marija Vučković recalled that farmers and fishermen could use the so-called blue-dyed fuels that have the government-subsided prices.

The minister said that the authorities were taking other measures to help the whole sector to be more competitive.

Use of blue-dyed diesel in 2020 approved for 97,200 farmers

In January 2020, the Paying Agency for Agriculture, Fisheries and Rural Development granted 97,200 farmers the right to use blue-dyed diesel in 2020 in the total amount of 173.1 million liters, .

The farmers could use cards with allocated amounts of blue-dyed diesel as of early January last year.

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ZAGREB, 8 Sept, 2021 - Minister of Economy and Sustainable Development Tomislav Ćorić said on Wednesday that he does not see any reason that would lead to higher electricity and gas bills for citizens.

Asked ahead of an inner cabinet meeting whether electricity and gas bills would increase, Ćorić said that he did not see any reason at the moment for that to happen.

"There is no absolute certainty that that won't occur, however, I do not see any reason for it to happen," he said.

In reference to an electricity price hike for enterprises, Ćorić said that one needs to be aware of the fact that the domestic electricity market is liberalised and functions in line with European and global markets.

"Those enterprises who concluded long-term contracts last year will not feel the price hike in the coming period, however, those enterprises which are doing that now will feel the adjustment on the market," he underscored.

The assumption is that many enterprises have protected themselves against unexpected changes and Ćorić doesn't believe that the price hike for electricity will be as high as 40% as reported in the media over the past few days, however, he added, a certain adjustment in prices will occur.

"This tells us that business conditions need to be stabilised, that is to avoid certain risks, and that can be achieved so that prices are agreed for a longer period," said Ćorić.

Asked whether entrepreneurs who didn't manage to conclude long-term contracts would transfer the higher cost to its consumers by increasing the price of their products, Ćorić said that the price of electricity is one of the key inputs in production which directly results in an increase in the cost of production.

"You either have to decrease your margin or increase the price of your product. That is how the market functions," he concluded, adding that those enterprises which were astute and contracted the price of electricity can now provide more competitive products.

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ZAGREB, 1 Sept, 2021 - The HEP national electricity provider paid HRK 840.6 million of last year's annual profit, into the state budget, HEP said on Wednesday following a decision by its general assembly on the distribution of its 2020 profit.

The decision on this contribution to the budget was made based on a government decision on the amount, method and deadline for state-owned companies, who are obliged to pay 60% of their 2020 profit after tax into the state budget.

HEP said in a press release that despite the unfavourable business circumstances in 2020, it had generated a profit amounting to HRK 1.4 billion. Based on the assembly's decision, which was held at the end of August, HRK 70 million will be set aside as legal reserves, while HEP will retain HRK 490.3 million of its profit and as mentioned earlier, HRK 840.6 million will go to the state budget.

HEP noted some of its investments during 2021, highlighting the Kosinj hydroelectric project which the government declared a strategic investment project n July. Together with the Senj 2 project, these are the two largest investment projects for HEP since Croatia's independence. The Senj 2 project is valued at HRK 3.4 billion and will produce 412 megawatts (MW) of electricity into the grid.

(€1 = HRK 7.5) 

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ZAGREB, 5 March, 2021 - Croatian electricity generation, transmission and distribution operators saw their profits increase from HRK 215.5 million in 2008 to 2.2 billion in 2019, a report by the Financial Agency (FINA) shows.

The number of enterprises engaged in electricity generation, transmission and distribution rose from 89 in 2008 to 708 in 2019, while at the same time the number of their employees fell from 13,465 to 11,274. The decrease was mainly due to the fall in the number of employees at the state-owned HEP electricity distributor, from 9,271 in 2008 to 6,535 in 2019 (-29.5%).

FINA noted that many of the companies established during the reporting period had no or only a small number of employees. In 2019, out of a total of 708 companies, 458 were without any employees, while 159 had one or two.

The total revenue of companies engaged in electricity generation, transmission and distribution increased from HRK 21.1 billion in 2008 to HRK 29.6 billion in 2019. Expenditure also grew, from HRK 20.8 billion to 27 billion. Net profit rose from HRK 215.5 million in 2008 to HRK 2.2 billion in 2019, an increase of a staggering 938.4%.

The trade balance was negative throughout the reporting period. The largest trade deficit, of HRK 4.4 billion, was recorded in 2012 and the lowest, of HRK 1.6 billion, in 2014. In 2019, the trade deficit was HRK 4.1 billion, up 69.1% from the previous year.

The average net monthly salary in this sector increased from HRK 6,386 in 2008 to HRK 8,000 in 2019 (+25.3%).

FINA recalled that the restructuring of the Croatian electricity sector began in 2001, while formal liberalisation began in 2008. As of 1 July 2008, all consumers could choose their electricity provider.

During the 12-year period several competitors emerged on the electricity market, most of them after 2009.

The highest revenues and profits were generated by state-owned companies HEP (HRK 10.5 billion in revenue and HRK 1.1 billion in profit) and HEP-Proizvodnja (HRK 4.2 billion in revenue and HRK 457 million profit).

Among the privately owned companies, the highest revenues were generated by GEN-I Hrvatska (HRK 932.4 million) and E.ON Energija, previously called RWE Energija (HRK 917.5 million).

(€1 = HRK 7.5)  

HEP's Distribution System Operator (ODS) plans for investing in Croatia include more than 60 million kuna by 2021 in Hvar alone.

As Darko Bicak/Poslovni Dnevnik writes on the 27th of October, 2018, in the period between 2018 to 2021, HEP Group will be investing in Croatia almost six billion kuna in the power grid throughout Croatia, as was recently announced in Stari Grad, Hvar.

HEP has pointed out that by investing in Croatia such a large sum, of which approximately four billion kuna will be poured into distribution and more than 1.8 billion kuna into the transmission network, HEP will create the proper preconditions for the further development of the Croatian economy, the country's tourism, and the security of the supply of both existing and future consumers throughout Croatia.

In the coastal areas and islands alone, HEP intends to invest about 1.2 billion kuna by 2021, this cash injection will directly contribute to the security of existing and future customers, have a significant impact on the development of tourism and the economy, and will also aid in the intended creation of a better quality of life and to the population survival of the country's many islands.

Of this huge amount, almost one billion kuna will be spent on the country's power grid, on renewable energy sources, and on more fueling stations for electric vehicles on the Adriatic.

HEP has emphasised that Croatian companies are very much involved in the implementation of the aforementioned large investments, and that these investments have been confirmed to be one of the most important drivers of the Croatian economy. The HEP-Operator Distribution System (HEP ODS) is planning to invest as much as 800 million kuna in the distribution network in the country's coastal areas in the period between 2019 and 2021, while over the coming decade, the plan is to invest a massive total of two billion kuna.

Investing in Croatia - and its islands

During the same period, HEP ODS plans to lay down 33 kilometres of submarine cables at a cost of about 43 million kuna, while for the period between 2022-2028, they plan to lay down 124 kilometres of submarine cables, totaling about 161 million kuna, or about 200 million kuna in the next 10 years.

An additional 339 million kuna will be invested by the Croatian Transmission System Operator (HOPS) by 2021, in exchange for high voltage submarine cables. In the Dalmatian network alone in 2018, HEP invested a massive 238 million kuna, and a total of about 500 million kuna was invested in the system of the entire coast.

HEP ODS plans to invest more than 60 million kuna into Hvar alone by 2021. These investments will include the reconstruction of TS Stari Grad, and then the reconstruction of the network on the southeastern part of the island with 15 TSs. The most significant investment of 40 million kuna will go to the construction of TS Hvar. In addition, the laying of the Podgorica submarine cable will also take place, at a value of 12 million kuna.

 Click here for the original article by Darko Bicak for Poslovni Dnevnik

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A step forward.

I never get this information on time. Could be, because I am not listening to Radio Split, or because of the short notice from HEP (Croatian Electricity Supply) - usually the day before.