Czech Industry Ministry has CZK 20bn in savings, key is change to supported energy source payments

The Ministry of Industry and Trade (MPO) is planning savings of around CZK 20 billion in connection with the government's consolidation package. It wants to save money on non-investment subsidies for industry. The basis will be a change to the system for reimbursing charges for supported energy sources (POZE). However, these payments should not be shifted onto households. Ministry spokesperson Marek Vošahlík told the Czech News Agency (ČTK) in response to a query. According to him, the specific changes will depend on negotiations with the affected unions and associations.

„The MPO has prepared a set of measures through which it will save around CZK 20 billion,“ Vošahlík said.

According to him, the savings will concern non-investment subsidy schemes for industry.

„The basis of these savings will be a change to the mechanism for reimbursing operating support for supported energy sources, which we will modify so that POZE payments are not shifted onto households,“ the spokesperson said.

According to him, the specific approach will be determined by negotiations with the affected industry unions and associations.

The current mechanism for charges for supported energy sources has been in place since last year. Following the outbreak of the Russian invasion of Ukraine and the sharp rise in energy prices, the state decided to waive these charges for households and businesses and paid them itself. Previously, the state shared POZE contributions with consumers. For example, in 2021 they amounted to CZK 43.2 billion. The state provided around CZK 27 billion, while customers paid the remainder through their electricity bills.

The MPO's savings are part of the government's consolidation package. According to Finance Minister Zbyněk Stanjura (ODS), the volume of state subsidies will fall by CZK 54.4 billion over the next two years. Of this, subsidies will be cut by CZK 45.6 billion as early as next year. Most of the subsidy cuts will consist of support under the ministries of industry and trade and agriculture. Stanjura stressed that the subsidy reduction is permanent and will therefore also be reflected in subsequent years. Overall, according to Stanjura, the consolidation package, which in addition to limiting subsidies also envisages changes to taxes and the pension system, will reduce the state budget deficit by CZK 94.1 billion next year and by a further CZK 53.4 billion in 2025.