LJUBLJANA — Slovenia’s government has approved proposed changes to its excise-duty rules that could significantly reduce taxes on heating oil and give the state greater flexibility to respond to unusually high energy prices.

The government approved the proposal during its latest regular session, saying the measure is intended to ease pressure on households, businesses and the agricultural sector as energy costs remain elevated.

Under the proposed changes, the excise duty on extra-light heating oil, known as KOEL, would fall from the current €157.50 to €42 per 1,000 litres. The government would then have the ability to reduce the rate further, potentially to €21 per 1,000 litres, which is the minimum rate currently permitted under the applicable European Union framework.

Heating oil is not used only for residential heating in Slovenia. It is also used in agriculture, meaning the proposed tax reduction could provide additional relief to farmers facing higher operating costs.

The government said the proposed system would allow it to react more quickly to sudden movements in international energy markets. Officials want greater flexibility to adjust excise duties when energy prices rise sharply and existing room for reductions becomes limited.

Slovenia is also seeking temporary permission from the European Commission to reduce excise duties on energy products below certain EU minimum levels. The government submitted its initial request at the end of July and has now approved amendments that also cover heating oil.

The latest decision follows a government review of Slovenia’s energy situation. The country’s Energy Agency reported that domestic electricity production covered 82.8% of final electricity demand in 2025, down substantially from 97.1% in the previous year.

Officials attributed part of the decline to less favourable hydrological conditions and reduced hydropower generation. The government said the figures demonstrate the importance of maintaining a diversified energy mix and increasing domestic energy production.

The government has therefore linked its immediate response to high prices with a broader energy-security objective. It wants Slovenia to become less dependent on imported energy while maintaining reliable supplies and competitive prices for consumers and businesses.

If the proposed legislation is adopted, the government would have additional room to reduce fuel-related taxes during periods of severe market volatility. This could help cushion consumers from sudden price increases while longer-term energy policies are developed.

The measure highlights Slovenia’s attempt to balance affordable energy, economic competitiveness and energy security at a time when international energy markets remain vulnerable to geopolitical and supply disruptions.