Italian government lends 4 billion euros to boost gas storage

By Giuseppe Fonte, Angelo Amante and Gavin Jones

ROME (Reuters) -Italy’s government said on Thursday it was lending state-owned firm Gestore dei Servizi Energetici (GSE) 4 billion euros ($4.17 billion) to buy gas to boost stockpiles, as the country strives to cope with a fall in Russian supplies and surging prices.

The rise on European gas markets has complicated operators’ efforts to meet Rome’s target to fill gas storage to 90% of its capacity, up from 58% at present, in line with wider European efforts to prepare for any further reductions in Russian gas.

A draft decree seen by Reuters did not spell out where GSE would buy the gas, saying it could act in coordination with state-controlled energy firms and gas transport group Snam.

Prime Minister Mario Draghi told a news conference he was confident Italy would meet the government’s end-year storage target by November.

The scheme, first reported by Reuters last week, is part of a broader decree approved by the cabinet on Thursday that includes measures worth around 3 billion euros to help families and firms deal with a surge in electricity, gas and petrol costs.

The draft decree extends to the end of the third-quarter measures aimed at cutting electricity and gas bills for enterprises and households. These include lowering tax rates on natural gas, and subsidising energy supplies for low-income families.

The new measures add to more than 30 billion euros budgeted since January to soften the negative impact of energy costs that are weighing on the growth prospects of the euro zone’s third-largest economy.

“Further action will come in July. We will continue to protect the purchasing power of households,” Draghi told reporters.

The former European Central Bank chief curtailed his attendance at a NATO summit in Madrid to chair the cabinet meeting as tensions rise in his multi-party coalition, with parties already jockeying for position ahead of a national election early next year.

However, he denied the abrupt return was due to the coalition turmoil.

“These measures had to be approved today otherwise it would have been a disaster. The third quarter begins tomorrow, and we would have had increases in energy bills of up to 35% to 40%,” Draghi said.

($1 = 0.9591 euros)

(Editing by David Evans and Barbara Lewis)