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The EUR 2.26 Billion Package Presented to Counter the Effects of Inflation and to Strengthen Energy Independence

Date

2022 04 01

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Today, the Government presented a wide-ranging package of measures entitled “Mitigation of the Effects of Inflation and Strengthening Energy Independence” with allocation of EUR 2.26 billion to absorb energy price shocks, to increase personal income and to strengthen Lithuania’s energy independence. Minister of Finance Gintarė Skaistė, who started the presentation, noted that the proposed measures were oriented towards the support to people, businesses and the implementation of public projects. 

“We want to protect and to strengthen the purchasing power of people in this difficult time when the Russian military invasion into Ukraine is causing an extremely rapid increase in energy commodity prices. Also, in line with the European Commission War Communication, we propose additional support measures for businesses both by absorbing higher energy prices and helping businesses to shift towards more sustainable energy sources, thus reducing bills in the future. Therefore, we are presenting a package of measures of EUR 2.26 billion, which will significantly contribute to the absorption of energy prices, mitigation of the effects of inflation and will give an impetus to the transition to more predictable and independent energy sources from Russia and to ensuring lower bills in the future," noted Minister of Finance G. Skaistė. 

The objective of the absorption of energy price shocks is pursued in the Government’s plan through the compensation of the share of gas and electricity prices for people by allocating EUR 570 million. At the same time, by absorbing the price shock, businesses are offered not only gas and electricity price compensation solutions, with a budget of EUR 120 million, but also the funds for support measures for the affected sectors in the amount of EUR 142 million. In total, EUR 832 million is foreseen for measures under the first objective. 

In order to increase personal income, the Government has planned to increase old-age pensions by 5 %, thus allocating EUR 106.3 million. This decision will mean an average additional increase in pensions of EUR 24 per month for elderly people with the necessary seniority. In parallel, the non-taxable amount (NTA) is also increased by EUR 80, which, subject to the approval of the Seimas, would make up EUR 540 and for people earning minimum monthly wages (MMW), it would mean an additional increase of EUR 16 in income. This decision will increase the NTA by 35 % since the last year. The plan foresees EUR 103 million for this measure. A further EUR 30.3 million is foreseen for higher social benefits and heating compensations, which will significantly increase the range of beneficiaries of heating compensations. Simultaneously, an increase in social assistance and public pensions as well as child benefits is foreseen by allocating EUR 75.7 million. In total, EUR 315.3 million is foreseen in the Government’s plan for increase of personal income. 

In total, EUR 1.14 billion will be allocated for the implementation of the first two objectives of the plan. 

For investments in energy independence — the third objective of the plan — the Government has planned EUR 1.12 billion. The majority of the measures envisaged for the implementation of the objective are designated for the population of Lithuania. EUR 275 million is allocated for a new renovation investment platform, while the grants for green renovation and modernisation of multi-apartment buildings amount to additional EUR 277 million. This measure is intended to subsidise 30 % of renovation projects that will reach at least the energy performance class ‘B’ of buildings and to deploy renewable technologies. In addition, EUR 46 million is earmarked for private charging infrastructure for electric vehicles in the yards of multi-apartment buildings, households and private companies. EUR 60 million is planned to promote the purchase and installation of solar power stations, and additional EUR 19 million − for the replacement of biomass and fossil fuel boilers by technologically advanced installations. In total, these measures will make up a share of EUR 677 million. 

In the meantime, the measures oriented towards the businesses of Lithuania will amount to EUR 253,7 million and include the measures such as the deployment of solar, wind farm and electricity storage batteries in businesses — EUR 60 million, hydrogen production equipment from renewable energy sources — EUR 70 million, green building renovation wood component production — additional EUR 50 million. EUR 38.5 million is also earmarked for upgrading technological equipment and solar power stations in industrial enterprises as well as EUR 35.2 million for investments in biofuel production technologies. 

In addition, investments for strengthening energy independence will also include public projects. Here four 50 MW energy parks are planned with a budget of EUR 100 million. The renovation of public buildings is also planned by allocating EUR 40 million and EUR 30 million for the deployment of solar and wind power stations in public buildings. EUR 10 million is planned for testing new renovation standards in four typical public buildings and, respectively, in multi-apartment buildings. EUR 9.8 million is planned for the installation of an offshore wind park in the Baltic Sea and EUR 3 million − for the information system for renovation processes. The share of public projects in the overall package presented by the Government will make up EUR 192.8 million. 

According to the Minister for Finance, the package proposed by the Government combines several different sources of funding, thus ensuring the smooth implementation of the measures. 

“The measures planned for strengthening energy independence have already been planned to be financed from the European Union investments, but after speeding up the implementation of the programme measures, they are proposed to be used effectively this year. In other words, we have advanced some measures, redirected funds by combining the National budget funds, EU assistance, as well as by creating additional financial mechanisms from private funds and reflows,” said Minister G. Skaistė. 

In particular, the package “Mitigation of the Effects of Inflation and Strengthening Energy Independence” consists of EUR 1.03 billion of the National budget funds, EUR 782.2 million is planned from the EU assistance, additional EUR 400 million is planned from financial instruments and, finally, EUR 53.9 million − from the Sodra budget.