To enhance energy independence in Latvia, the country may receive 100 – 200 million euros from European Union’s new RePowerEU fund. The option to borrow money from European Recovery Fund is also open, said Latvian Minister of Finance Jānis Reirs’ advisor Ints Dālderis at a press-conference held on Tuesday, 31 May.
He explained that a total of EUR 20 billion is available for EU member states in this fund. The money will be distributed based on a formulae taking into account demographic indicators, economic development and other factors. Currently it’s not possible to accurately say how much Latvia might receive. However, Dālderis predicts
the amount may reach 100 to 200 million euros.
Latvia will also consider borrowing about EUR 2 billion from the European Recovery Fund, which Latvia has yet to use.
The finding provided to Latvia from the Recovery Fund is EUR 1.82 billion.
Dālderis said the amount of money available from RePowerEU and conditions under which the money may be provided will be known in a couple of the months. Currently it is not possible to say for certain how this money will be used, because discussions have only just begun.
It is clear, however, that the money will need to be used on measures intended to help improve energy security and energy efficiency, said Dālderis. He added that the Ministry of Economics is asked to prepare with possible investment directions, which may include use of renewable energy resources, improvement of the transmission system, investments into de-synchronisation of Latvia’s energy system from Russia and Belarus.
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Dālderis also said the money may be used as investments for the liquefied gas terminal project. Until now conditions of the European Recovery Fund did not provide for investments into gas supply. However, because the geopolitical situation has changed, and RePowerEU may support promotion of independence of gas supplies.
Director for Indirect Taxation and Tax Administration in the Directorate- General for Taxation and Customs Union in the European Commission Maria Teresa Fabregas Fernandez said with additional funding from RePowerEU member states will be able to pick the best way to reduce dependence on Russian fossil fuel.
Fernandez said the EC will discuss investments plans with member states. The EC will provide only guidelines – it will be for member states to estimate necessary investment amounts.
Fernandez also said the EC expects Latvia’s first payment request from the Recovery Fund and expects it may be reviewed and the payment provided within two months.
EC’s developed RePowerEU plan is meant to serve as an addition to the Recovery Fund. One of the main goals is ensuring Europe’s independence from imports of Russian energy.
As previously reported, EC recommends Latvia to increase public investments in order to contribute to accomplish green and digital reorganisation and energy security using Europe’s Recovery Find, RePowerEU and other European funds, according to the documents submitted to the joint meeting of the Saeima’s Budget and Finance Committee and European Affairs Committee.
EC notes that Latvia needs to ensure next year’s increase of state expenditures meets requirements of a neutral policy, considering that provision of temporary and focused support to dampen energy price rise for poor households and enterprises will continue.
Latvia should be prepared to adapt expenditures to the changing situation.
To reduce inequality, EC invites expanding taxation of property and capital and ensuring adequate healthcare and social protection.
The commission also recommends continuing the implementation of the recovery and resilience plan in accordance with last July’s approved positions and indexes, as well as submitting planning documents for 2021-2027 cohesion policy so that it is possible to conclude discussions with the EC and then immediately commence the plan’s implementation.
At the same time, Latvia should improve accessibility to financing for small and medium-sized companies using public lending and guarantee plans aimed to help ease strategically important investments, especially when it comes to green reorganisation and regional development.