Croatia: Gas and Electricity Prices to Go Up

Deputy Prime Minister and Economy Minister Radimir Cacic said the 22% rise in the household gas tariff would translate into a 33-kuna increase in the average household bill.

The gas tariff paid by state industries will remain unchanged, while the price for schools, hospitals and some industry sectors will be reduced by 6.75%.

Cacic said the change would boost the competitiveness of some goods and services.

The 20% increase in the price of electricity supplied to households will translate into a 40.24 kuna increase in average monthly bills, the minister said.

Utility charges for industry will also rise, but by a smaller percentage, since the government has acted to moderate the increase in electricity distribution and transmission prices, he added.

Prime Minister Zoran Milanovic said the price changes were a result of facing up to reality and he added that while this was bad news it could not simply be put off. He said it was up to the government to explore every option but some things were beyond its control.

Croatia imports 40% of the electricity it consumes. Half of the remaining 60% is generated by hydro plants and the other half using imported gas and oil. Oil and gas is bought at global market prices.

The last electricity price rise in Croatia was in 2008 and since then the crude oil price has increased two and a half times, Cacic said, adding that the same applied to gas prices.

In the same period, the price of coal has gone up by just 8.21%, which is why coal power plants such as the one in Plomin are important, he added.

The electricity and gas price hikes will cover losses accrued by the INA gas company and will enable the HEP electricity supplier to break even by the end of this year, Cacic said, and he noted that the gas price in Croatia is still lower than in neighbouring countries.

With the new electricity price, Croatia will reach 87 percent of the European Union average.

Utility price hikes follow an increase in Value Added Tax, and bankruptcies at major dockyards and companies such as the Dalmacijavino beverage maker, and the Vjesnik newspaper, Cacic acknowledged.