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

The Italian government says energy companies will foot the bill for a reduction in fuel duty and help to cut utility costs for the poorest. But the firms say the cost to them is 'negligible' as profits soar.

'The impact is zero': Energy giants not worried by Italy's tax on profits
The headquarters of Italian multinational oil and gas company ENI in Milan. Photo by Miguel MEDINA / AFP

The Italian government on Wednesday brought in a new package of measures which it claims will help protect consumers and businesses from recent steep energy and fuel price rises.

The measures, included in a decree approved on Friday, are worth 4.4 billion euros and include help towards paying energy bills for those on the lowest incomes, and a temporary 25-cent cut to taxes on petrol and diesel or motorists.

Prime Minister Mario Draghi said the measures would be “financed not by the public purse but by companies in the energy sector”, as his government promised to levy a windfall tax on the increased profits made by energy firms off the back of soaring costs.

The decree confirmed that the levy will take the form of a one-time, 10 percent tax on “extraordinary” pre-tax profits made between October 2021 and March 2022, comparing them to profits in the same year-ago period.

But Italian energy giant Enel said the tax would be negligible.

“The impact for us is zero. It’s something between 7 to 10 million euros,” Enel CEO Francesco Starace told Bloomberg TV on Monday.

In 2021, Enel posted a net profit of 3.19 billion euros, while Eni reported net profit of 5.82 billion euros.

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

Forward contracts that guarantee fixed prices for two years means that Enel is protected from price fluctuations, he said, “so we don’t have benefits or extra benefits out of this volatility”.

Italian hydrocarbon group Eni, meanwhile, told AFP it was premature to estimate any new tax, but a spokesman said provisionally it could be at most “a few hundred million euros”.

The Spanish government attempted to tax profits of major energy companies in September, before it backtracked months later in the face of opposition by the sector, which warned the measure would jeopardise future investment.

Enel’s Starace called for a mechanism to regulate prices for at least 12 months, calling the volatility of gas prices in Europe “totally out of control”.

Starace said Enel was in the process of stopping investment in Russia and reducing its exposure. 

The group, which is 23.5 percent owned by the Italian state, operates three thermal power plants and two wind farms in Russia.

Eni, in which the state controls 30.3 percent, said earlier this month it would sell its 50 percent stake in the Blue Stream gas pipeline, which it holds equally with Russian energy giant Gazprom, following the invasion of Ukraine by Moscow.

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Lights out: How Christmas in Italy will be different this year

As the European energy crisis continues, some cities in Italy have chosen to save on electricity by downsizing regular Christmas displays, thus making this year’s festivities a little less flashy.

Lights out: How Christmas in Italy will be different this year

With less than a month to go until the Christmas holidays, many might be rejoicing at the prospect of finally seeing their cities lit up by dazzling Christmas displays.

But, as the European energy crisis shows no sign of abating and many cities across the boot keep struggling to square their accounts in the face of soaring bills, some residents may be disappointed to know that this year’s festive decorations might differ from the norm.

Milan, Italy’s economic capital, was one of the very first Italian cities to announce it would significantly reduce Christmas displays to save on energy.

READ ALSO: Lights off and home working: Milan’s new energy-saving plan for winter 

After reports emerged in early October that the city would end up spending a whopping €130 million on energy bills alone in 2022, Milan’s mayor, Giuseppe Sala, was quick to warn residents that Christmas decorations would be “restrained” and operate “for shorter periods of time”.

And, it wasn’t long before Sala made good on his promises. 

Earlier this month, the city’s authorities agreed on putting up decorations and light displays on December 7th (that is over two weeks after the usual date) and taking them down on January 6th instead of late January. 

Christmas lights in the streets of central Milan

Christmas lights in Milan will be switched on on December 7th, that is over two weeks after the usual switch-on date. Photo by Miguel MEDINA / AFP

Also, while in previous years Milan’s city centre was illuminated overnight, this year’s Christmas lights will be switched on at 4pm and switched off at midnight. 

But, while Milan residents might be slightly dissatisfied with the new arrangements, they sure have little to complain about when compared to Rome residents. 

It’ll be a dark Christmas (literally and, perhaps, even figuratively) for most areas of the Eternal City and not merely because of the current energy crisis. 

READ ALSO: Energy crisis: The Italians reviving ‘nonna’s’ traditions to keep costs down

The city’s tender for this year’s Christmas lights contract received no bids before its deadline on October 27th, which means that, in many neighbourhoods, festive decorations will be largely left to the goodwill and financial means of the residents.

So while the popular Piazza di Spagna, Porta Pia and Via Alessandria will light up over the holiday season thanks to private funding, the San Giovanni and Tuscolano neighbourhoods and Via Cola di Rienzo are currently expected to remain au naturel.

Christmas light in a street in Rome

Many areas of the capital, Rome, will be without lights this year due to lack of funding. Photo by Tiziana FABI / AFP

Things will generally be better in Venice and Florence, where local authorities have recently chosen to maintain their usual arrangements, the only exception being the replacement of regular lights with energy-efficient, LED ones. 

So, while the lighting might be a little softer and displays might not be as remarkable as in previous years, both cities should be able to deal with late-December energy bills more comfortably than they would have had to do otherwise.

READ ALSO: EXPLAINED: How Italy has avoided a huge hike in gas prices – for now 

Having said that, not all Italian cities have decided to resize their Christmas offerings on the back of eye-watering electricity prices. 

Naples, which has long been known for the extravagance of its Christmas and New Year celebrations, has seemingly chosen to turn a blind eye to the energy crisis and will allocate as much as €1.5 million (that’s €150,000 to each one of the ten local municipalities) to this year’s displays.

Unsurprisingly, the comune’s decision has been drawing widespread criticism, with many local political figures pointing out that part, if not most, of the above-mentioned amount should have been spent elsewhere, perhaps in the form of a one-off ‘Christmas bonus’ for struggling households and businesses.

The available money should have been used to “turn off the crisis and light up people’s hearts”, city councillors Antonio Culiers and Francesco Flores said in a joint statement earlier this month.