Estonian entrepreneurs to the state: subsidies from neighbouring countries to their companies destroy our competitiveness

The Estonian Chamber of Commerce and Industry and the Estonian Employers' Confederation together with 19 business organizations turn to the Government with a proposal to create temporary support measures for Estonian companies to compensate for high electricity prices. This is urgently needed to preserve jobs and tax revenue for the state.

Arto Aas, CEO of the Estonian Employers' Confederation, explained that support is currently essential to maintain the competitiveness of Estonian companies, because the vast majority of European Union countries help their companies. In particular, Estonia's energy-intensive and exporting industrial sector has found itself in a difficult situation. However, the Estonian government's attitude towards helping companies has been indifferent and at times even arrogant. "In a situation where high energy prices and inflation fill the state treasury with millions of extra euros, we ask nothing more than part of this money to be reinvested in the competitiveness of Estonia's economic environment," commented Aas. "It would be a sensible step to preserve jobs, business and tax revenue."

In the appeal, it is emphasized that the state has the money to help companies. For example, state tax revenues are projected to increase by 1.7 billion euros in 2023, and ownership revenues, including dividends from state-owned energy and network companies, by more than 100 million euros.

Mait Palts, director general of the Estonian Chamber of Commerce and Industry, emphasized that in today's exceptional situation, where there is a war in Europe, which is always treated as force majeure and where many of the existing principles do not apply, additional funds must be found immediately to support companies. "Right now, it's like an experiment that is going on, and we're left to rely on natural selection. Unfortunately, this is largely at the cost of the livelihood of our own people," said Palts. "We also have to deal with solutions for adding capacity, storage and creating connections, but even with the best of intentions, it takes several years to build a new wind farm."

For example, Latvia, Lithuania, Finland and Sweden, which are important target markets for local companies, have developed various support measures for industrial companies. Countries are reducing network fees, compensating renewable energy fees and have set a price ceiling on the energy price. In the appeal, it is pointed out that while other countries are looking for ways to support their companies, a large part of Estonian business consumers, in addition to the lack of support, will face an increase in the network and renewable energy fee in the new year.

Business organizations make four proposals to the Government:

1. Temporarily exempt companies from paying the electricity network fee
The support measure could be valid at least from January 2023 until the end of March 2023. A similar support measure also applied from January 1 to March 31, 2022. Since such a measure has already worked well and did not entail a large administrative burden, a similar measure could be continued in the future. It can also be considered a solution where the share of support is not 100 percent, but for example 75 or 50 percent.

2. Exempt companies from the renewable energy fee
The renewable energy fee exemption could apply to companies even temporarily, for example in 2023. Renewable energy producers are reimbursed this amount through the state budget. As a result of the exemption, the final price of electricity for the company in 2023 would be 1.24 cents/kWh, and including VAT would be 1.49 cents/kWh cheaper.

3. Also compensate companies for part of electricity price that exceeds the maximum price
For households, the compensation applies to part of the electricity price exceeding a certain limit. Similar compensation should be extended to companies, unless other measures have been taken to mitigate the adverse impact. Such compensation for the part exceeding the price ceiling has also been established for companies, for example, in Latvia.

4. Extend the universal service to all companies
The current decision to allow only households and small businesses to join the universal service is not enough. Medium and large companies make up approximately half of the Estonian economy and pay a significant part of the tax revenue of the state budget. Most of the innovation is done at medium and large companies, and the security of energy and food supply mostly depends on them.

To date, 21 organizations have already joined the appeal. If an organization that is not on this list still wants to join the appeal, it can be done by writing to marko[at]koda.ee