FINANCE

Energy subsidy to be extended

energy-subsidy-to-be-extended

The government is set to announce the extension of subsidies for power bills into the first few months of the year, with priority being given to vulnerable households, using property assets as a criterion so as to exclude holiday and secondary homes.

The measures are to be announced by Prime Minister Kyriakos Mitsotakis and concern January for now, but will be adjusted to the course of rates and the state’s financing capacity. For this month, the government aspires to offer the biggest possible coverage for households or even all domestic consumers. This will depend on the available resources, which will come from the emissions auction, with estimated revenues this year of 1.5 billion euros.

The government further intends to support small and medium-sized enterprises that have taken a hit from the massive rise in the cost of power. To this end, the Energy Ministry has proposed a special mechanism for subsidizing bills to the European Commission’s Directorate General for Competition (DGComp).

More good news, meanwhile, is coming from negotiations on natural gas procurement. After months of talks, Greece’s Public Gas Corporation (DEPA) and Russia’s Gazprom have reached an agreement on prices, so that the gas DEPA will obtain this year will rely by 80% on its market price and 20% on oil rates. The balance will shift to 85%-15% next year, with a further adjustment on that pattern for the years up to 2026, when the existing contract expires.

DEPA has therefore managed to contain the Gazprom requirements from the original 100% on the gas market rate to just 80% for this year, while retaining unchanged the agreed quantities of 2 billion cubic meters per annum.

The deal, government estimates say, paves the way for more support to households from DEPA in the first few months of 2022 – as Energy Minister Kostas Skrekas also pointed out recently – and to energy intensive industries.

DEPA’s management will determine the precise support measures within the month, having already absorbed the first shockwaves from soaring gas rates with a 16% discount to domestic bills in October and November and a 40% reduction in December.