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Lithuania provides additional support amid spiralling energy prices

Residents will receive a VAT compensation in energy bills for centrally supplied heating, cutting rates from the current preferential rate of 9 to 0 per cent. Whilst energy suppliers will be reimbursed for the difference by the state budget.

The new additional support package was announced on Wednesday by Minister of Finance Gintarė Skaistė, Minister of Energy Dainius Kreivys and Minister of Social Security and Labor Monika Navickienė, after receiving approval in the Lithuanian parliament.

“While the global market is still experiencing a very tense situation due to the spike in energy prices, we propose to extend the measure applied in the last heating season – compensating the VAT rate for centrally supplied heat to residents for two seasons. This is one of the more effective measures in the regulated market, where VAT benefits directly translate into lower bills for consumers,” said Finance Minister Skaistė.

The approved government plan, as proposed by Energy Minister Kreivys, will also seek to replace gas with cheaper heating alternatives, allowing for an immediate reduction in energy bills, whilst also accelerating the national biofuel production. This will significantly expand the number of compensation recipients and will simplify the application process, allowing a wider range of residents to apply for the compensation. 

“We are preparing for the heating season – increasing the supply of biofuel and the possibility of replacing the gas used in the heat farm with fuel oil, diesel and forest cutting waste will reduce the predicted increase in heating prices for residents,” said the Energy Minister.

Minister of Social Security and Labor M. Navicienė noted that the bureaucracy is being reduced for people’s convenience, and the expanded range of heating compensation recipients allows two-thirds of working people to apply for the support scheme. 

“After increasing the amount of state-supported income and expanding the number of recipients of heating compensation, two-thirds of working people, as well as people who are struggling, pensioners, disabled people and others can safely apply for compensation for heating. The support will reach those who need it most, and you will only need to apply once and the compensation will be allocated for the entire heating season.” said Minister of Social Security and Labor Monika Navickienė. “The most important thing is that people should not be guided by the still prevailing stereotypes that such support belongs only to those who are financially vulnerable, as middle-income earners can apply to the municipality for compensation,” the Minister added.

The newly announced measures will last until summer 2024. Separately, the Lithuanian government recently introduced an energy-saving plan, worth around 1.3 billion euros, which aims to save an estimated 800 million in the next two years.

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