'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.

Published: 23 March 2022 12:24 CET

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.