The Ministry of Economic Affairs has not yet announced how it will compensate the entrepreneurs for the increasing cost of energy, and Postimees failed to get answers to its questions by last night. Last season, companies and institutions were reimbursed the grid service cost by 50 percent from October to January and fully from January to March.
Several European Union countries have already promised to support entrepreneurs in the coming autumn and winter. Efficient support to entrepreneurship gives the companies in these countries a clear competitive advantage in the market.
It is really hard to predict a bright future in expensive electric light
Ille Nakurt-Murumaa, President of the Estonian Association of Small and Medium-sized Enterprises.
Uncontrolled price increase has a significant and hard impact on companies – from quite small firms to larger companies. In the more energy-intensive sectors with frequently low profit margin, this means a difficult decision: to curb activities by suspending production, making staff redundant or by temporarily closing the whole enterprise and dismissing the employees.
The idea that entrepreneurs have no worries – they can transfer the cost to the price of the production – and only consumers need to be supported, is extremely erroneous..
First of all, it is never possible to transfer all costs to the final price; and even if you do so, this means a serious decline in turnover because the increased price is no longer acceptable to the consumer.
In order to avoid bankruptcies and the loss of jobs, the government should compensate for the cost of grid services. The mechanisms of the electricity exchange should also be reviewed. Speculative activities should be curbed since it is not normal if companies go bankrupt due to uncontrolled price increases and the state pays compensation to consumers, while Eesti Energia reports its hyper profit.
The Estonian Association of Small and Medium-sized Enterprises intends to approach the government in the near future to find rapid solutions for the enterprises.