RIGA, Jan 14 (LETA) - The Latvian Association of Large Cities (LLPA) supports the proposal of Economics Minister Janis Vitenbergs (National Alliance) for preventing heating supply risks, LETA learned from the association.

The local governments agree with the proposal to set the price ceiling for centralized heating supply and gas heating, and to reduce the value added tax rate (VAT) on energy suppy to 5 percent.

LLPA believes that such support may ease price hike in a short term and provide immediate support to local governments and their residents.

The association said that at present there is critical situation in Daugavpils, where state of emergency in was declared in energy sector at the end of last year due to energy price hike and the local government turned to the government for assistance.

Daugavpils was the first local government to raise alarm, but there are other Latvian cities that might find themselves in the same situation soon, such as Jelgava, Valmiera, Liepaja.

Thus, government-level solution is necessary to prevent the energy crisis in the country.

As reported, Vitenbergs will repeatedly urge the government coalition to reduce the value added tax (VAT) rate on electricity, natural gas, thermal power and fuelwood.

The minister's spokeswoman Vineta Vilistere-Lace revealed that the economics minister's proposal, which will be presented at the coalition's weekly cooperation meeting, provides for temporary reducing the VAT on energy from 21 percent to 5 percent from January through April.

To keep down households' energy costs, the Economics Ministry is proposing a compensatory measure, namely, capping heating rates on centralized and gas-fired heating systems from January 1 to April 30.

"The current situation with electricity, gas and heating bills is dramatic for households and businesses alike. The existing support mechanisms for electricity consumers are only a partial solution. Consumers are alarmed at their bills, which are unprecedently high this heating season. Even a small reduction of each bill is an essential for maintaining people's solvency," the economics minister said.

According to Vilistere-Lace, the Economics Ministry's proposals are supported by the Latvian Association of Local and Regional Governments (LPS) and the Association of Latvia's Large Cities (LLPA). On Friday, Vitenbergs discussed possible solutions to energy poverty risks with LPS chairman Gints Kaminskis, LLPA executive director Viktors Valainis (Greens/Farmers) and Welfare Minister Gatis Eglitis (New Conservative Party).