Heat providers warn of rising heating prices when Seimas considers restricting import of biofuels Business

A group of Seimas members claim that the country’s biofuel producers, unable to compete with the cheap Belarusian biofuels that have flooded the Lithuanian market, are on the brink of bankruptcy.

For this reason, it is proposed to introduce restrictions so that biofuels purchased by heat producers from biomass originating in third countries cannot represent more than 20%. purchase of biofuels per year.

The modifications to the Law of Heat Economy and Energy Resources Market, which provide for it, were adopted by the Seimas on Tuesday.

Businesses that fail to meet these requirements would face fines of up to 10%. Annual income of a heat producer: up to 20 thousand. euros.

However, heat providers claim that such a solution will increase the price of heat in the country, and competition specialists see violations of competition.

You want to keep local producers

Kęstutis Bacvinka, a peasant parliamentarian who submitted these amendments to the law to the Seimas, stated that the objective of these amendments was the energy independence of Lithuania from third countries, as well as the objective of preserving Lithuanian biofuel producers. According to him, Lithuanian biofuel producers are on the brink of bankruptcy.

“If the political will of a country were to ban biofuels or make them more expensive, we would become dependent on them after abolishing our sector”, K. Bacvinka sees the threats.

Conservative member Edmundas Pupinis doubted that the World Trade Organization would allow such bans, and conservative Jurgis Razma wondered why 20 percent was chosen. poster.

When asked by E. Pupinis why Lithuanian biofuel producers are not competitive, K. Bacvinka replied that Belarusian biofuel producers are subsidized.

However, conservative Seimas member Andrius Kupčinskas sees commercial interests in such proposals. He noted that biofuel producers face very strong competition: biofuel consumption has decreased since the Kaunas cogeneration plant started operating.

“This bill was born because biofuel producers are interested in reducing competition and artificially restricting imports to the Lithuanian market?” Asked A. Kupčinskas.

K. Bacvinka objected that the objective of these reforms to the law is to preserve the viability of the sector, such as maintaining it when 60 percent. Biofuels imported from Belarus are said to be tough.

Restrict competition

Meanwhile, antitrust specialist Marius Juonys 15 minutes argued that such proposals raise problems of restriction of competition.

“Restricting imports also limits the ability to compete with those who transport and sell those imports. Any restriction restricts economic activity and competition. And our Constitution is based on the principles of freedom of economic activity and competition,” said M. Juonys.

He added that reduced competition could also affect prices.

“Such regulation raises questions, because biofuel prices also affect heating prices. If there is more competition, prices fall, if there is less competition, the price level is higher. If it restricts competition, it cannot assume it will not affect prices, “said the lawyer.

Warn that the price of heating will rise

The Lithuanian Association of Heat Suppliers also agrees with this, warning that such a decision will respond to consumers as it will increase the price of heat.

The Lithuanian Association of Heat Suppliers states that the current low prices of biofuels and consequently heat are mainly determined by the competition between cheap biofuels from Belarus and Lithuania. In Estonia, for example, biofuels are roughly twice as expensive.

President of the Valdas Lukoševičius Association 15 minutes He stated that restricting and reducing the import of biofuels into Lithuania would certainly increase local fuel prices.

“This will make heat more expensive, because it is almost twice as expensive in neighboring countries, and in Lithuania Belarusian biofuels are dropping the price a lot. Without this factor, biofuel prices will return to the level of a couple ago years, almost double ”, believes V. Lukoševičius.

He explained that in Lithuania, Belarusian biofuels are cheap due to low transport and unloading costs: the product is simply transported across the border and would become more expensive during subsequent transport.

For heating prices to increase, Seimas member K. Bacvinka, who submitted amendments to the project, objects, claiming that prices should not change, because the price of biofuel in the price of heat is only 12 percent.

Push the excavator

V. Lukoševičius believes that the initiative to adopt such amendments came this summer, because a lot of biofuel was left unused in the spring due to the warm winter.

“It has to be sold, and here cheap Belarusian fuel is hampering it, it is an attempt to serve their interests.” We discussed in the Seimas, there was a dialogue with the ministry, but the project was stubbornly driven by an excavator ”, V. Lukoševičius is convinced.

According to the association, although according to BALTPOOL, cheap Belarusian biofuels on the Lithuanian market do not exceed 30 percent of the annual volume, the possibility of their import pushes down the prices of biofuels and not everyone likes it. It is observed that cheap biofuels also force a reduction in natural gas prices in Lithuania, as these fuels compete with each other. Therefore, artificial appreciation of biofuels by restricting imports would raise the overall level of heating prices in Lithuania.

The association proposes to help Lithuanian biofuel producers to think about direct support for entrepreneurs to the state, for example by providing support for the purchase of equipment, applying tax incentives, etc., but not artificially increasing heating prices.

V.Lukoševičius also points out that, if such modifications are adopted, the companies risk being fined because they bought Belarusian biofuels, the origin of which is hidden.

It will even offer delisting

After the adoption of the proposed amendments to the law, it is proposed to withdraw the producers, importers or sellers of biofuels who have hidden the origin of the biomass from the stock market for one year. At the same time, they could not enter into direct bilateral agreements with heat producers.

As BNS recalls, Egidijus Purlys, Deputy Minister of Energy, said at the meeting of the Seimas Commission on Energy and Sustainable Development that such measures would make it possible to determine the proportion of imported and local biofuels and would not encourage local biofuel producers to increase the prices of production.

According to E. Purlis, this year Belarus’s biofuel feedstock will reach 20 percent. Markets.

Lithuanian biomass energy association Litbioma has warned that some 20 companies in the country promise to stop biofuel production. According to the director of the association Vilma Gaubytė, Lithuanian producers cannot compete with a much cheaper Belarusian raw material.

The largest supplier of biofuels, according to data for the first quarter of this year, occupies 15.5 percent. market and does not reach the 20% target established in the National Energy and Climate Action Plan for 2021-2030. market frontiers. At least 15 companies share 3/4 of the market, 17 companies occupy 75%. Markets

The goal is that by 2030, the amount of biofuels imported into Lithuania does not exceed 20 percent.