Croatia Faces Rising Energy Prices

By Drazen Remikovic

Rates for household electricity and gas were raised in Croatia this month, increasing gas bills by 22% and electricity costs by 20%.

Consumers are angry with this new burden on their household budgets, while analysts say that the state could make profit another way.

The government, which approved the hike on May 1st, explained that part of the national industry which receives direct gas supplies will not experience a price hike, while gas prices for schools, hospitals and some industry sectors will be raised by 6.75%.

“For all customers whose consumption is greater than 1 million m3 of gas per year, the distribution fee is lowered, which is why they dropped the overall price of gas. This decision is considered important for economy stimulation,” Ana Perica, ministry of economy spokesperson, told SETimes.

Damir Novotny, an economy analyst and a former member of the governors’ council at the Croatian National Bank, said that the price hike was inevitable because Croatia is a big importer of different types of energy.

“This is definitely a shock to all Croatian citizens and poses a major problem because the price increase is extremely high. This was done because Croatia is a large importer of energy. But before the price increase, the government had to restructure the state electricity company, and divide it into several companies to reduce the cost. The calculation of electricity spending should be more transparent, because now, Elektroprivreda is counting the final accounts based on some of its internal, vague tariffs,” Novotny told SETimes.

Croatia currently imports nearly 70% of its energy. The average net wage in April amounted to 700 euros, while the government announced that the new electricity and gas increase will cost an additional 15 to 20 euros per month.

Lav Komnenic, 27, a student of economy from Zagreb, said that the price hike is a direct attack on the standard of living.

“The government is reducing electricity and gas prices for the companies and increasing them for the citizens. Could the citizen theft be more obvious than this? What about their salaries, when will they make improvements in this area,” Komnenic told SETimes.

Finance Minister Slavko Linic said that electricity bills in the households will be higher by about 14 euros. Prime Minister Zoran Milanovic agreed with the public reaction. “Unfortunately, this is bad news and one of the things we cannot control. This is reality, but we can say that this is the last bad news.”

Robert Lajovic, 75, a retiree from Osijek, told SETimes that his pension cannot withstand the new government-imposed taxes.

“I receive an average national pension, which is slightly less than 300 euros. The electricity bill, on average, is about 70 euros. Now it’ll be 100 euros. One third of my pension must cover the electricity bill. I don’t know how can one live in Croatia on 200 euros a month,” Lajovic said.

Energy prices in the region are also rising. In Montenegro, the price of electricity increased by 7% in February. Citizens have so far organised three protests against the hike, but the government refused their demands for an adjustment.

In Serbia last year, the price of electricity rose by 15%, and the state electric company announced that there will be no increase until September.

In Bosnia and Herzegovina, Electroprivreda Hercegbosne, one of the three state electric companies, also raised rates. Beginning in April, the hike was 12%, while the other two state electric companies have not announced price increases.