Slovakia is facing significant changes in energy prices next year, with gas prices expected to rise sharply due to both market conditions and an increase in VAT, while electricity prices could see a slight decrease thanks to a VAT reduction.
These shifts are part of the government’s broader efforts to balance public finances, including a consolidation package worth EUR 2.6 billion to EUR 2.7 billion.
Gas prices for Slovak households are poised to increase substantially, with the commodity price expected to rise by nearly 50%, from EUR 25 to EUR 37 per megawatt-hour, according to the Sme daily. This figure does not include distribution, transport fees and VAT, which are also set to increase. VAT on gas for households will rise from 20% to 23%, adding further pressure on consumers.
Martin Vlachynsky, an analyst at the think tank INESS, warned of a complex and “chaotic” rate system, with various fees and taxes affecting final prices. Radovan Potocar, an energy analyst, added that it was challenging to predict the exact increase for consumers, as it would depend on individual tariffs and usage patterns. Households that rely on gas for heating, particularly those with larger homes, are likely to be hit hardest, with estimates suggesting a price rise of over 30% for those in the most common consumption bracket.
This sharp rise in gas prices is partly due to previous government interventions, which capped and subsidised prices. Last year, Slovakia’s gas prices were about half the EU average, thanks to more than EUR 1 billion in subsidies. However, the government has signalled that it may no longer afford such substantial subsidies.
Heating costs are also expected to climb, as VAT on heat will rise to 23%. However, analysts believe the increase will be more gradual than for gas. There are about 800 localities in Slovakia where the Regulatory Office for Network Industries (URSO) sets prices, which vary depending on the fuel used – whether gas, biomass or coal.
The Economy Ministry, led by Denisa Sakova (Hlas), is preparing a system of energy price assistance for vulnerable households. The exact details of this assistance are still under discussion.
In addition, the ministry is attempting to secure cheaper gas from Azerbaijan.
While gas and heat prices are expected to soar, electricity prices could remain relatively stable or even decrease slightly, thanks to a VAT reduction from 20% to 19%. The price of electricity as a commodity is expected to remain at EUR 61.2 per megawatt-hour, the same as this year, due to a memorandum signed between the government and Slovenske Elektrarne (SE), the dominant electricity producer.
However, the opposition party SaS has raised concerns that the European Commission has expressed ‘serious reservations’ about the agreement between the government and SE. According to SaS MP Karol Galek, if the agreement is not finalised, electricity bills could rise by up to 50%, with those currently paying EUR 400 potentially paying EUR 600.
The ministry has rejected these claims, insisting that Minister Sakova has been negotiating with the European Commission to ensure the memorandum remains in place for 2025, potentially at an even more favourable rate than previously agreed.
These energy price hikes are expected to drive up inflation in Slovakia.
The Institute of Financial Policy at the Finance Ministry has already revised its inflation forecast for next year to 5.4%, up from the 3.9% estimated in June.
The increase in gas prices alone is expected to contribute to this inflationary pressure, with the institute predicting a 30% rise in gas prices, including the higher VAT. (The Slovak Spectator)