Electricity masts are seen at the sunset in Milan’s neighborhood, Italy, February 21, 2016. REUTERS/Stefano Rellandini

March 18, 2022

By Giuseppe Fonte

ROME (Reuters) – Italy will approve measures on Friday to help consumers and firms cope with surging energy costs exacerbated by the Ukraine crisis, a draft decree seen by Reuters showed.

The wide-ranging decree before an evening Cabinet meeting also strengthens Rome’s powers to block business deals in sectors deemed strategic to the national interest and removes anti-virus software linked to Russia.

The latest steps to curb energy prices come on top of some 16 billion euros ($17.70 billion) budgeted since last July to try and soften electricity and gas bills for firms and households.

The package will be funded by savings or higher revenues elsewhere in the state budget and so will not weigh on the public deficit, government sources said.

Rome last autumn targeted the deficit to fall to 5.6% of GDP this year from 7.2% in 2021.

The decree beefs up Rome’s “golden power” to block takeovers and other commercial agreements in areas such as 5G networks and cloud technology.

Firms operating in these sectors will be required to supply considerably more detailed notification to the authorities for proposed mergers and supply deals.

The decree also sets up a 10-member body at the prime minister’s office responsible for vetting any potentially sensitive deals.

Since the golden power was introduced in 2012, government authorities have blocked foreign forays into Italy just six times. Five of those headed off Chinese bids, and four have come since current Prime Minister Mario Draghi took office 13 months ago.

In the energy part of the decree, Rome sets out plans to spend increased VAT revenues from higher energy bills to cut excise duties on petrol and diesel. This would cut prices paid at the pump by 8.5 cents per litre for 30 days.

Draghi is also in talks at a European level on proposals to ease state aid rules, claw back excess profits made by energy companies, and temporarily cap wholesale gas prices.

Italy’s gross domestic product grew 6.6% last year following a record contraction of 9.0% in 2020 caused by extended coronavirus lockdowns, but it is now facing an increasingly weak growth outlook.

The Treasury is preparing to downgrade Italy’s growth target significantly below 4% this year from a previous 4.7% goal made last autumn, one of the government sources said.

($1 = 0.9041 euros)

(writing by Gavin Jones and Giuseppe Fonte; Editing by Leslie Adler)

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