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Energy prices gently rise toward EU standards

Starting August 1, bills received by Slovak households have gone up: the government has finally approved increases in the cost of basic state services, including electricity, gas, water, and radio and television reception. The biggest change comes with electricity prices, which will increase 5 percent for businesses and 10 percent for residential users. The last rise in household electricity fees was in 1991, when they jumped 70 percent from the fully subsidized, pre-1989 prices. Even with that increase, Slovakia's electricity costs have stayed in the cellar. According to Minister of the Economy Ján Ducký, Slovakia has the third lowest energy prices of all EU applicants.

Starting August 1, bills received by Slovak households have gone up: the government has finally approved increases in the cost of basic state services, including electricity, gas, water, and radio and television reception.

The biggest change comes with electricity prices, which will increase 5 percent for businesses and 10 percent for residential users. The last rise in household electricity fees was in 1991, when they jumped 70 percent from the fully subsidized, pre-1989 prices.

Even with that increase, Slovakia's electricity costs have stayed in the cellar. According to Minister of the Economy Ján Ducký, Slovakia has the third lowest energy prices of all EU applicants. For over two years now, the International Monetary Fund (IMF) and the European Bank for Reconstruction and Development (EBRD) have both urged the country raise its prices, but it has taken the government seven months to approve a proposal.

And the government is still trying to cushion the impact. "We have decided to increase prices bit by bit every year so as not to cause a shock," Ducký said, adding that the government wants to guarantee that "the poorest segment of the population will be impacted the least."

Still, everyone is likely to see a difference. Government analyses predict that the 5 percent rise in industrial power costs will cost Slovak businesses 1 billion Sk per year, a burden that will most likely be passed on to consumers.

The country's 81 biggest electricity users will actually pay 7 percent more for their energy consumption, thus easing the weight slightly on smaller businesses. For example, the aluminum producer Slovalco in Žiar nad Hronom, with a gross profit of 6.5 billion Sk in 1995, will be smacked with 96 million Sk in additional costs next year.

"We are certainly worried about the impact of this regulation," Ducký said. "It might have an effect on businessmen's ability to compete." On the other hand, he added, the government hopes the move will push manufacturers to save energy rather than raise prices, because "the cheapest energy is the one that is never produced."

Electricity prices are not doing the only damage to the Slovak pocketbook. Monthly fees for tap water usage will increase from 4 Sk to 5 Sk per cubic meter, or an average of 192 Sk to 240 Sk a month per household. The proposed costs of radio and television usage will increase by 30 Sk a month, to 50 Sk and 80 Sk respectively.

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