The gas storage plant Reckrod is pictured near Eiterfeld, central Germany, July 14, 2022, after the Nord Stream 1 pipeline was shut down due to maintenance. (MICHAEL PROBST / AP, FILE)
BRUSSELS / PRAGUE / VLADIVOSTOK – The Czech Republic, which currently holds the rotating Presidency of the Council of the European Union, wants to remove capping Russian gas prices from the agenda of this Friday's meeting of the European Union member states' energy ministers, the country's Industry and Trade Minister Jozef Sikela said in Prague on Wednesday.
Speaking to the Senate's Committee on National Economy, Sikela called the cap a "political instrument" and argued that setting a limit on prices will not help Europe through the ongoing energy crisis.
"In my opinion, this is an unconstructive proposal. It is more about another variant of sanctions against Russia than a current solution to the energy crisis in Europe. And now we don't want to prepare further sanctions but to solve the energy situation," Sikela said.
The Czech Republic’s Industry and Trade Minister Jozef Sikela said the Czech Republic would prefer a model that would separate the gas market from electricity prices. This, he said, could significantly lower the price of electricity per kilowatt hour but warned that it could lead to an increase in gas consumption
He said the Czech Republic would prefer a model that would separate the gas market from electricity prices. This, he said, could significantly lower the price of electricity per kilowatt hour but warned that it could lead to an increase in gas consumption.
Another option presented by the European Commission would be to cap prices for other forms of energy besides gas, such as nuclear power. The Czech EU Council Presidency might also consider tax breaks for energy manufacturers and distributors to ease overhead, according to the Czech News Agency.
In addition, the country wants to discuss limits on the sale of climate credits used in the EU Emissions Trading Scheme.
The European Union proposed a price cap on Russian gas on Wednesday after President Vladimir Putin threatened to cut off all energy supplies if it took such a step, raising the risk of rationing in some of the world's richest countries this winter.
The escalating standoff could drive up sky-high European gas prices further, adding to already eyewatering bills EU governments are paying to stop their energy providers collapsing and prevent cash-strapped customers freezing in the cold months ahead.
READ MORE: EU races to help industry as gas halt rattles markets
However, even if a European solution is reached on Friday, Czech trade minister Sikela said this will not be enough to help his country's citizens. "Therefore, we have almost prepared a set of measures to regulate and intervene in energy prices. These will be aimed at all groups of consumers — households, public services and the corporate sector," Sikela said.
The Czech government already approved a plan last month worth 177 billion Czech crowns (US$7.15 billion) aimed at easing the burden on consumers.
The country's inflation reached 17.5 percent in July, according to figures published by the Czech Statistical Office (CSU), with most of this rise attributed to soaring energy costs.
According to a theoretical analysis conducted by the Czech Finance Ministry, an embargo on Russian gas would hurt the Czech economy next winter. It shows that the country's gross domestic product in 2023 would fall by up to 2.9 percent in that scenario and then by up to 1.6 percent in 2024. This year, however, households and industry would not be in danger thanks to sufficient reserves.
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Still, experts say people are worried about the future. Last Saturday saw a massive demonstration in Prague attended by 70,000 people, according to local police. They demanded the resignation of the current government, military neutrality and negotiations with gas suppliers — primarily with Russia — to alleviate the burden of high energy prices.