Latvian Association of Local and Regional Governments (LLPA) is concerned about the rapid surge of electricity prices and its effect on municipal budgets. This means continued provision of municipal functions may be at risk, the association warns.
Estimates performed by the cities for 2022 suggest they will require several million euros from the state budget in order to cover growing energy resource costs and ensure municipal services continue uninterrupted.
This creates a major burden for municipal budgets. The reason is because there is no compensation mechanism and municipalities are forced to look for additional finances in their own resources, notes LLPA.
This year’s energy resource price rise exceeds that of last year’s price rise by 50%. This alone is enough to put considerable pressure on municipal budgets. Expenses for energy resources are on a rise, which affects the cost of municipal functions.
Estimates show that in some municipalities the increase of energy resource costs will be about 60% (90% in select municipalities).
Looking at estimates regarding the increase of energy costs, LLPA reports in Jurmala budget cost increase in 2022 is expected to be about 46%, which is more than EUR 300,000 to be allocated from the budget to cover electricity costs.
The municipal company Jurmalas gaisma, which is in charge of street illumination in the city, may suffer a cost increase of 97%, which is equal to about EUR 600,000.
Estimates from Jelgava municipality suggest the cost increase may be 60% next year. The energy resource cost surge in Liepaja, Jekabpils Ogre and Riga may reach EUR 1 million to EUR 2 million.
In Riga the expected increase of benefits for benefits to be paid to households may reach EUR 1.5 million in 2022.
Major cities in Latvia expect the rapid surge of electricity prices will have a deep impact on their budgets and ability to provide services to their residents unless a source of additional financing is found. (BNN/Business World Magazine)
