19.01.2022

Prime Minister Kurti: The Government of Kosovo will increase support for consumers

 

Prishtina, 19 January 2022

The Government that I represent and lead intends to take actions that will address the immediate effect of this crisis but also the long-term one, said the Prime Minister of the Republic of Kosovo, Albin Kurti, in today’s press conference.

To ensure that Kosovo will be independent in terms of energy, the Prime Minister announced that the Government is planning to announce the first auctions for the construction of new clean capacities and as sole shareholders of KEC, the revitalization of existing units and diversification of the sources on which the production of energy in this enterprise depends.

As a result of the global energy crisis that has caused the rise of energy prices to unprecedented levels and due to breakdowns in KEC power plants that have increased our need to import energy, ERO regarding its competencies and responsibilities deriving by the Energy Regulatory Law, has started with the extraordinary review of tariffs.

Legally ERO and its board are independent and cannot be influenced by anyone in making their decisions, including our government, said the Prime Minister.

In the joint conference with the Minister of Economy, Artane Rizvanolli, Prime Minister Kurti stressed that the Government of Kosovo will increase support for consumers in need who cannot afford to pay. Those who will be most affected by this increase will have a safety net that we will guarantee the consumption for their needs.

Taking into account the extraordinary and unprecedented situation in the European electricity markets that has affected Kosovo, the Government of the Republic of Kosovo has pledged to subsidize the citizens and businesses of Kosovo, with 75 million euros, thus protecting them from tariff increases.

What we are paying now are the consequences of inactivity for more than two decades in the sustainable development of electricity supply. At the same time, we are feeling the aging and lack of investment in our generating units, said Prime Minister Kurti.

Electricity subsidy by the Government will affect that the tariff for business customers remains with 0% increase, the tariff for household consumers up to consumption of 600 kWh remains with 0% increase, while the tariff proposed by ERO for household consumers for consumption over 600 kWh to be reduced, reflecting the import price for these consumers and promoting energy efficiency.

The full speech of Prime Minister Kurti:

Dear citizens and journalists,

On Monday, the Energy Regulatory Office published the consultative report on the extraordinary review of tariffs. Unfortunately, so far, we have heard various interpretations which do not seem to have been intended to properly inform the citizens of Kosovo. Consequently, we organized this press conference today.

As a result of the global energy crisis that has caused the rise of energy prices to unprecedented levels and due to breakdowns in KEC power plants that have increased our need to import energy, ERO regarding its competencies and responsibilities deriving by the Energy Regulatory Law has started with the extraordinary review of tariffs. Legally ERO and its board are independent and cannot be influenced by anyone in making their decisions, including our government.

However, despite the fact that ERO has an obligation to reflect the real price of energy, for years, fictitious costs have been maintained for electoral purposes. Moreover, measures affecting more prudent energy consumption, such as block tariffs, have been removed. So, their removal has been a very big mistake, the damage of which we have felt first in the past years and especially now.

This crisis has only highlighted the problems we have inherited. What we are paying now are the consequences of inactivity for more than two decades in the sustainable development of electricity supply. At the same time, we are feeling the aging and lack of investment in our generating units. Institutions have failed in the past to signal to citizens that dependence on electricity for heating is not sustainable as a practice. Instead of investing in the generation and expansion of the district heating network, what they have done is that they have approved the construction of thousands of apartments, buildings, settlements that now depend on electricity.

Current electricity market prices indicate that the crisis will last far beyond winter and is a dilemma we as a government are facing. To limit the level of damage that these practices have caused to citizens, the Ministry of Economy, respectively the Government of Kosovo, has expressed readiness to make available a subsidy for the electricity sector up to 75 million euros, to ensure no tariff increase for household customers consuming up to 600 kWh per month and all business customers.

The energy crisis has spread to all participants in the sector, creating circumstances in which we have no winners, but only different levels of damage that as the Government of Kosovo we must try to repair.

We have said it in previous conferences but it is worth reiterating that there are two main factors that have led to this crisis. One is external. Kosovo, like other countries, covers a quantity of its energy demand from imports. That does not make us weaker. On the contrary, the characteristics of each country, this includes natural resources, geographical positioning, and technological development lead to an energy mix which is not at all times sufficient to cover domestic consumption. Consequently, the high prices on international energy exchanges were out of the orbit of my influence, as Prime Minister or the Government of Kosovo. All countries in Europe and those in the Western Balkans region faced high prices.

But, the other factor, which continues to be decisive is the fact that Kosovo has now for 20 years been left at the mercy of energy traders. Instead of investing in energy capacity building in line with growing demand and the rate of economic development, policymakers who have moved to decision-making positions through their actions – and often silence, have given priority to other producers in the countries of the region.

Although more than 1 billion euros have been invested in KEC since the post-war period, the situation of production capacities is the same as when we left the war. In these investments, if it had not been ruthlessly stolen, just like in the countless tenders today, the situation with the production capacity of KEC would be completely different and there would be no continuous decline of blocks as it seems to us. Therefore, we cannot call these over 1 billion investments but over 1 billion funds for KEC, where we do not allow to call investments a significant part.

In Kosovo, since 2005, there has been talk of building new production capacity. If the construction of new capacities or the reconstruction of Kosovo A had started in time, as it was an idea turned into a concrete project a few years ago, today there would be no need for energy import at all, but on the contrary the energy crisis could bring benefits to local producers.
In the rare cases in these post-war years, when serious investors, despite the image we have conveyed, have decided to come to Kosovo, they have been faced with illegal requests from persons who, in fact, should facilitate processes.

And with every day they have worked without a long-term vision of Kosovo’s energy security, the gap between citizens’ demands and the opportunities of the energy sector has only widened.
The treatment of KEC as a transitional enterprise and not as an asset of the highest strategic importance in the country, has left the main source of energy in Kosovo in a miserable situation, where despite the efforts of staff the situation at the power plant continues to be unpredictable. At a time when energy producers everywhere are in a position to sell at good prices, we need to make sure our power plants do not fail.

Now that Minister Rizvanolli and I are addressing you, the measures we have at our disposal cannot provide solutions to the problems that have been stratified for decades.

But the government I represent and lead aims to take action that will address both the immediate and long-term effects of this crisis.

If the price of Energy had risen linearly to reflect the demands of the sector, we would not be in this situation as we are today. However, since this did not happen, ERO as an independent authority has put before us the financial solution of the crisis.

The financial solution that represents the debt accumulated by the participants of the sector to keep the lights on comes at a very high price. The price proposed by ERO is a very heavy burden to be borne by the citizen in Kosovo. Consequently, we will make available a 75-million-euro subsidy so that the increase in energy prices does not affect household consumers consuming up to 600 kWh, as well as Kosovo businesses. We have also reduced the impact of increase of prices of household consuming over 600 kWh, and the available Government subsidy, which is not said to be spent and which also depends on future energy prices on the international stock exchange, will significantly mitigate the tariff increase details that will be given by Minister Rizvanolli.

At the same time, to ensure that Kosovo becomes energy independent, we are planning to announce the first auctions for the construction of new clean capacities and as sole shareholders of KEC, the revitalization of the current units and diversification of sources on which energy production in this enterprise depends.

At the same time, the tariff increase has not affected businesses. In this way, the impact on increasing the prices of products and services offered in our economy will be limited.

The Government of Kosovo will increase support for consumers in need who cannot afford to pay. Those who will be most affected by this increase will have a safety net that we will guarantee the consumption for their needs.

The subsidy we have allocated does not cover the entire burden of the crisis because it means that other budget lines would disappear from our plan. A new school would not be built, retirees would not have pension increases. But, equally important, the financial ability of the government to make sure that a few years from now we will not have problems of this nature.

Dear journalists,

The increase in energy prices did not occur in the part of energy produced in Kosovo. The energy offered to consumers by KEC production still has the same price. The increase occurred in the imported part. Imports are high and this has increased the cost for all of us.
I will now give the floor to the Minister of Economy, Artane Rizvanolli, and then we will be able to answer your questions.