Czech construction association: Higher energy prices will hurt construction and wipe out industry

Higher regulated energy prices and the end of state support for paying this component will negatively affect Czech construction and be devastating for Czech industry. The Association of Construction Entrepreneurs (SPS) said this in a press release seen by the Czech News Agency (ČTK). According to the association, the sharp increase in energy costs will feed through to construction material prices. It could also affect the competitiveness of Czech construction and reduce housing affordability.

The Energy Regulatory Office (ERÚ) has proposed a significant increase in the regulated component of energy prices for next year; this component accounts for tens of percent of the final price. Under the proposal, the regulated component of household electricity prices would rise by 71 percent year on year. The increase would be even steeper for large consumers: 113 percent year on year at the high-voltage level and 206 percent at the very-high-voltage level. ERÚ will announce the final regulated component of energy prices at the end of November.

Other organisations have also previously opposed the energy price increases, including the Czech Steel Union, the Association of the Glass and Ceramics Industry, the Association of Small and Medium-Sized Enterprises and Tradespeople, and several others.

According to SPS, for large consumers the increase compared with 2022 will be 200 to 250 percent. Compared with 2023, it will be even greater. „We consider these uncompetitive conditions, under which large consumers would pay the fourth-highest electricity prices in Europe. We see this as a complete undermining of the domestic economy, which is still waiting to get back on its feet,“ said Jiří Nouza, president of the Association of Construction Entrepreneurs.

Nouza cited data from Eurostat. According to the data, household electricity and gas prices in the Czech Republic were significantly higher in the first half of this year than in the other Visegrad Group member states: Poland, Hungary and Slovakia. Electricity prices for Czech households rose by more than a quarter year on year, while gas prices increased by more than half. According to Eurostat, the average household electricity price in the Czech Republic rose by 26 percent year on year in the first half of the year to 0.3212 euros (about 7.9 Kč) per kilowatt-hour.

According to Nouza, energy price increases will come at a time when construction output in Czechia has yet to recover from the post-pandemic recession, which was further deepened by the war in Ukraine. Higher prices for construction materials and other building costs could therefore make construction even more expensive.

According to SPS, the consolidation package will also have a major negative impact on energy-intensive sectors. The government is proposing to end the existing exemption from the so-called energy tax for certain fuels, including electricity and gas used in metallurgical processes. In its press release, the association urged the government to reconsider its measures.

„One of the conditions for a country's economic prosperity is a healthy construction sector that the state does not stifle. More far-sighted EU member states know that supporting industry is crucial in the current situation,“ said SPS Vice-President and Lasselberger managing director Roman Blažíček.