Slovak companies paid the price for the cheap energy paradise. Business: A trap was created, even rich

The governments led by Robert Fico tend to boast about how they support Slovak entrepreneurs. Prime Minister Fico has visited enterprises several times, where he symbolically worked a night shift at the production line.

„We were taking components out of the furnace, which then have to undergo a visual inspection at the lamp. So apart from my back and legs hurting, my eyes are also like an angora cat's,“ Fico described his last night shift.

In 2017 Fico visited Lozorno, where in one shift he made 497 welds in the automotive plant.

While Fico points out that Slovaks work the most night shifts in Europe, factories, on the contrary, are grappling with another problem. It is called high energy prices.

The last governments of Eduard Heger and Robert Fico managed, through state interventions, to push household energy prices even below European values. The problem, however, shifted elsewhere. For Slovak companies, on the other hand, the bills for electricity and gas jumped significantly, even above European levels. Factories therefore say that our energy aid is set up in an unbalanced way.

It was companies, not households, that felt the high prices

During the first half of 2024, households had gas prices 89 percent lower than the European average. The trend continues with electricity too, for which we pay 60 percent less in houses and flats than the average family in Europe. The reason for the cheap gas is large subsidies, which over two years carved almost four billion euros out of the state coffers.

Electricity, in turn, was kept in check by the state thanks to a memorandum with Slovenské elektrárne, which set the level of the commodity component at 61.2 euros per megawatt-hour.

On the other hand, we have companies and various operations and enterprises, where the situation was the opposite. In the first six months of this year, companies paid on average 0.0851 euros per kilowatt-hour for gas including VAT. The European average was at the level of 0.0720 euros per kilowatt-hour. The gap was most open throughout the whole of last year. It therefore currently applies that Slovakia has the sixth most expensive gas for business in the Union. Within the region, only Poland is more expensive. Even companies in much wealthier Germany pay for cheaper gas.

The bills are pushed up by state fees

For illustration, in the first half of last year domestic companies paid 0.1176 euros per kilowatt-hour for natural gas, while in Europe the levels were 0.0924 euros per kilowatt-hour. All these are prices without taxes and fees.

Although companies could, according to the market, have a cheaper commodity next year, the bills may be pushed up precisely by various tariff charges.From January, for example, the fee called the gas transport tariff for transport through domestic pipelines is increasing.

For unregulated customers who have a separately invoiceable transport item, the increase in the transport price may represent at least 1.20 euros per megawatt-hour and higher.

A factory that consumes four thousand megawatt-hours of the commodity per year could pay more than three thousand euros on the increased fee.

An identical scenario prevails with electricity for companies. For example, during the second quarter of last year our companies had the fifth most expensive electricity including fees and taxes. This year the level has already evened out and, compared with the average in the Union, entrepreneurs pay roughly one percent more for power than average European entrepreneurs.

The state should reconsider some inputs

Energy costs affect competitiveness on the European market.

Experts therefore say that the state should reconsider some inputs in energy pricing. „Power electricity has a market price, which in our region is defined mainly by Germany. The state has no influence over this price, and that is good. The taxes and fees imposed on the price of electricity could be reduced,“ says Radovan Ďurana, analyst of the INESS portal.

As an example of taxes and fees where he sees room for adjustment is the support of renewable sources. These subsidies are paid from a fee that is contained in the electricity bill. According to Ďurana, subsidies for green power plants could rather be financed from the state's tax revenues, or possibly from auctions of CO2 allowances.

He also sees possibilities for reducing fees in the so-called price for transmission services. Its amount is set every year by the state joint-stock company Slovenská elektrizačná prenosová sústava. This fee is also on the invoice and affects the final invoice.

Energy aid created a trap

„The high price of electricity is a pan-European problem, not just a problem of Slovakia. There is no short-term solution to high prices. However, I do not consider the problem to be a lack of resources for reducing the price of electricity for the business sector, but on the contrary, the manipulation of the price of electricity for households,“ Ďurana pointed out the problem.

Representatives of the business segment state in this regard that Slovakia set up energy support in an unbalanced way. They comment that on one side they short-sightedly kept energy prices low for households, without a gradual annual increase of five to ten percent.

According to industrialists, this created a trap, as a result of which future price increases may be much more dramatic than if households faced a moderate annual increase.