The Saeima Budget and Finance (Tax) Committee approved amendments to the Energy Law on September 23, 2024, designed to temporarily suspend the security reserve service fee on fuel through December 31. Drafted by the Union of Greens and Farmers, the urgent legislative package aims to lower pump prices for residents, farmers, and businesses amidst broader cost-of-living pressures in Latvia.
Legislative Push to Suspend Fuel Security Fees
The approved amendments target the mandatory security reserve service fee, which has stood at 81.26 euros per tonne of petroleum products since January 1. According to estimates from the Union of Greens and Farmers, abolishing this fee and passing the complete reduction down to retail buyers could shave roughly eight cents off a litre of fuel.
The Saeima Budget Committee scheduled the bill for its first reading on October 1. Lawmakers also decided to submit the proposal to the National Security Committee to evaluate potential ramifications for the nation’s strategic inventory. Harijs Rokpelnis, a Saeima member representing the Union of Greens and Farmers, acknowledged that Ministry of Economics calculations show the price relief may not be immediate or complete. Rokpelnis noted that the government has not fully consulted responsible security institutions regarding the stockpile adjustments.
Parallel Proposals on Biofuel Mandates and VAT Cuts
Lawmakers advanced a separate legislative track on September 23 by conceptually approving amendments to the Transport Energy Law. This measure removes the mandatory requirement to blend biofuel into fuel products as a mechanism to lower costs. Authors of the bill estimate that removing the mandate will reduce fuel expenses for farmers and fishermen by 0.03 to 0.15 euros per litre. The framework also includes a planned exemption for diesel utilized by the National Armed Forces and allied troops, permitting extended storage for military equipment.
Meanwhile, a separate proposal by the Union of Greens and Farmers to reduce the value-added tax rate on fuel from 21% to 12% until the end of the year failed to secure consideration in committee due to a lack of quorum. Rokpelnis attributed the postponement to poor planning and political reluctance. Ministry of Economics figures indicate that lowering the value-added tax would decrease diesel prices by approximately 15.6 cents per litre and petrol by 14.6 cents per litre, yielding monthly household savings of about 15.6 euros for a consumer using 100 litres. However, the same ministry estimates the tax cut would cost the state budget between 18 million and 20 million euros across a three-month span.
Upcoming Excise Duty Reductions
The latest parliamentary debates follow broader tax adjustments adopted by Saeima MPs on September 24. Lawmakers passed amendments to the Law on Limiting the Increase in Petroleum Product Prices, establishing scheduled cuts to excise duty rates for both diesel and petrol. Set to take effect on October 1, 2026, these excise modifications are projected to trim retail prices by an additional eight cents per litre if retailers pass the full tax savings on to consumers.
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