Energy, Energy Market, Estonia, Gas, Markets and Companies, Taxation

At its current production volumes Estonian Cell pays annually 400,000 euros of natural gas excise duty, which makes it one of the largest gas excise payers in this country. If the government raised the excise duty by 134% by 2020 as currently planned, the company would have to shell out more than 900,000 euros a year, board member Siiri Lahe said in a letter to the Ministry of Finance.

A natural gas levy on this scale would render pointless all the investments made by the company until now in energy efficiency and a return to sustainability, Lahe said. The company that had a cumulative loss of 19 million euros at the end of 2015 has invested 17 mln euros in the last few years to improve its financial performance and avert bankruptcy, she pointed out. Some 11 mln euros of the total investment was made in a biogas production complex to reduce outlays on natural gas purchases.

Putting such a burden on an industrial enterprise is domestically disproportionate and in the context of international economy, clearly harmful for competitiveness when comparing Estonia-based industry with rival energy-intensive industries in Europe and nearby countries, Lahe said.

In view of that, Estonian Cell proposes to cancel the natural gas excise duty hike in the planned scope or add to the bill a regulation setting a ceiling on the duty so as to secure the 

competitiveness of large energy-intensive industries.

The new government plans to raise the excise duty on natural gas by almost half in 2018 and by as much as 134% from the current level by 2020.

The tax is set to rise by approximately 20% from 33.77 euros to 40.52 euros per 1,000 cubic meters next year. In 2018 it will rise to 50.65 euros and in 2019, to 63.32 euros. The biggest leap will take place in 2020, when the rate will surge to 79.14 euros, it appears from a table published by the Ministry of Finance.