Greek government mulls new bailout plan amid growing dissatisfaction with energy prices

Alarmed by public backlash over energy prices and the rising cost of living, the New Democracy government is promising to develop a new national support plan to benefit households and businesses. It is expected to be implemented in June.

The national plan will be horizontal, will set electricity prices at last year’s level and will be retroactive to May.

The subsidy will rise to 72 euros per month, while it is reportedthat, in addition, an additional one-time cash assistance for vulnerable households is being considered.

Alco poll for Open TV, what are the main problems people see in Greece:

  • 60% cost of living
  • 24% war in Ukraine
  • 6% tension with Turkey
  • 5% pandemic
  • crime 4%.

In conversation with CNN Greece Government spokesman Giannis Ikonomou said on Wednesday that the government’s intervention would also be “strong”, capping the price of KWHour, which will be cut to 16 cents from 22 at present.

Funding will reportedly come from the state budget and the Energy Transition Fund, as well as taxing the excess profits of the country’s energy companies.

In interviews with other media outlets, sources in the prime minister’s office said the Energy Regulatory Authority had completed its review of energy company windfalls and would present its findings to the government in May.

Prime Minister Kyriakos Mitsotakis announced in April that there would be a 90% taxation on excess profits, and the amount would be spent as a subsidy for vulnerable citizens.

“Once these support measures are implemented, we will no longer see electricity bills that are four or five times higher,” a government spokesman told Oikonomou, acknowledging that electricity bills are disproportionately high.

Intervention options

To stem the shock of rising consumption above 300 kilowatt-hours, the government is considering a number of options. In the area of ​​wholesale prices, it is planned to introduce a price ceiling.

Possible options: set the price ceiling horizontally and/or introduce different prices, depending on the electricity generation model.

There is also a combination intervention scenario with a price ceiling, with a significant increase in the subsidy on the retail price of electricity.

At the same time, the chances of intervention in the value-added tax rate, which places a burden on staple foods, appear slim.

Correction Clause

The government’s national plan appears to contain no action against the adjustment clause, which has caused electricity prices to skyrocket and plunged households and businesses into despair. Most likely, the government will wait for the decision of the courts, as a number of organizations, consumers and individuals have challenged it in court.

However, the cynical approach of some ministers and government deputies …………..

MP on Wednesday Babis Papadimitriou told the Kontra channel that it is the private energy companies that are putting pressure on the National Energy Regulator so that the state-owned company ΔΕΗ also applied the adjustment clause.

Two days ago development minister Adonis Georgiadis said that companies producing electricity primarily from natural gas are protected from bankruptcy with an adjustment clause.

PS. For now, it is citizens and small businesses that go bankrupt under the clause because this Greek government is repealing free market laws that include business risks such as bankruptcy and allowing private companies to be protected at the expense of the country’s citizens.

It is not surprising that in opinion polls the gap between the ruling conservative New Democracy and mainstream opposition left SYRIZA is getting smaller every month.

May Poll: ND 30.6% SYRIZA 22.5%
March Poll: ND 31.1% SYRIZA 22.2%

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