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MONEY

‘It’s a crock’: Italians outraged at 25-cent fuel discount

Italy cut fuel duties - and therefore the price at the pump - on Wednesday in response to soaring costs. But drivers and petrol station operators are far from impressed with the move.

'It's a crock': Italians outraged at 25-cent fuel discount
A picture taken in Rome earlier this month shows a board displaying the fuel price at a gas station, as refueling has become more expansive as a result of the war in Ukraine. (Photo by ALBERTO Pizzoli / AFP)

Italy has cut fuel duty in a move aimed at bringing the cost back down below two euros a litre, after prices soared to record highs in March due to the war in Ukraine.

But motorists and gas station operators were not satisfied with the cut, which amounts to a 25-cent discount for one month only.

This is a reduction in excise duty (a tax on the production and consumption of goods) on petrol and diesel. After adding VAT at 22 percent, the total discount to the consumer is 30.5 cents per litre.

The reduction came as part of a package of measures approved by the government on Friday, worth 4.4 billion euros, which Prime Minister Mario Draghi said would be “financed not by the public purse but by companies in the energy sector”.

READ ALSO: ‘The impact is zero’: Energy giants not worried by Italy’s tax on profits

But the government’s response was not welcomed at the pumps on Wednesday, with may left unimpressed by both the size of the discount and the length of the validity.

“I feel a bit fooled. In 30 days it will be over and everything will be as it was before, so what has changed?” Italian citizen Marco Morbidelli from Pesaro told newspaper Il Resto del Carlino.

“It’s a crock,” he said.

Petrol station operatives are also dissatisfied with the plan, arguing that it doesn’t help them run their business.

Alessandro Bailetti, a manager of a petrol station, said, “The state has lowered the cost of excise duties, but we have paid for our fuel by paying them too. Who will give us back these 30 cents that they have taken away? They say there will be a contribution – we hope so, even if we still don’t know when and how.”

Even with the cut to fuel cost, some Italians say that prices at the pump are still very high.

Motorist Daniele Luzi told the paper, “The state should not allow these increases and, above all, should examine its conscience about everything it makes us pay, because it is inappropriate.”

READ ALSO: How to save money on your fuel in Italy

The measures come after Italian industry and consumer groups urged the government to slash VAT and excise duty to keep the country moving after businesses, including Italy’s hauliers, said they couldn’t afford to operate.

Last week, Italian consumer watchdog Codacons revealed that the price of petrol had risen by 39 percent in a year in Italy, and diesel prices have risen by 51 percent.

Codacons said taxation was at 55.3 percent on every litre of petrol and 51.8 percent on diesel.

According to industry group Confindustria, the surge in fuel prices means the Italian state is “taking higher tax revenues thanks to the VAT paid on fuel prices.”

In the last week alone, the extra revenue gained [from VAT] is up by approximately 45 million euros compared to in the second week of February, the group said.

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ENERGY

Drought hits Italy’s hydroelectric plants amid energy crisis

Hydroelectric power production in Italy has plunged this year thanks to a severe drought that has also sparked water restrictions and fears for agriculture, industry sources said on Friday.

Drought hits Italy's hydroelectric plants amid energy crisis

Hydropower facilities, mostly located in the mountains in the country’s north, usually cover almost one fifth of Italy’s energy demands.

But the ongoing lack of rain is causing problems at a time when Rome is desperately trying to wean itself off its dependence on Russian gas due to the war in Ukraine.

READ ALSO: Italy’s heatwave to last another week and get even hotter, say forecasts

“From January to May 2022, hydro production fell by about 40 percent compared to the corresponding period in 2021,” a spokesman for Utilitalia, a federation of water companies, told AFP.

“Hydro production has been steadily decreasing since July 2021,” he said, blaming “the severe shortage of water even at high levels”.

An industry source told AFP that while the situation was constantly changing, estimates for the first six months of 2022 suggest nationwide hydroelectric generation will be almost half the equivalent period of 2021.

One small plant near Piacenza, southeast of Milan, was shut indefinitely on June 21st due to low levels on the River Po that feeds it, the Enel energy company said.

READ ALSO: How long will it take Italy to wean itself off Russian gas?

“Considering the current drought situation, other hydro plants are not operating at full capacity,” a spokesman added, without giving further details.

The Po River, which stretches across the north of the country, is Italy’s largest reservoir of fresh water. Much of it used by farmers, but the area is suffering its worst drought for 70 years.

Italy’s largest agricultural association, Coldiretti, said the drought is putting over 30 percent of national agricultural production and half of livestock farming in the Po Valley at risk.

Local authorities say the situation in the area has been “extremely delicate” since last week, with four regions asking the national government to declare a state of emergency and hundreds of towns now rationing water.

In the northwest region of Piedmont, water is being rationed in more than 200 municipalities according to the ANSA news agency.

Drought in Italy: What water use restrictions are in place and where?

The Maggiore and Garda lakes are both far lower than usual for this time of year, while further south, the level of the Arno, Aniene and Tiber rivers have also dropped.

Arid conditions are set to worsen as the heatwave currently gripping Italy is expected to last until the end of June, with temperatures around the country of “up to 40°C in the shade” forecast early next week.

In Milan and Turin, a massive increase in electricity usage for cooling day and night has pushed the electricity grid beyond its limits over the past week, leading to blackouts.

With many parts of Europe experiencing unusually high temperatures for this time of year, experts have repeatedly warned that longer, earlier heatwaves are a consequence of global heating.

“As a result of climate change, heatwaves are starting earlier,” said Clare Nullis, a spokeswoman for the World Meteorological Organization in Geneva.

“What we’re witnessing today is unfortunately a foretaste of the future” if concentrations of greenhouse gases in the atmosphere continue to rise and push temperatures towards 2 degrees C above pre-industrial levels, she added.

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