ATHENS – Facing a re-election campaign in 2023, Greece’s New Democracy government will spend 1.9 billion euros ($1.89 billion) to double subsidies for households who can’t afford electric bills that have nearly doubled.
That will extend a program put in place after utility costs soared in the aftermath of Russia’s invasion of Ukraine that put crimps on energy supplies that could be further reduced this winter.
“The ongoing war is dramatically worsening the energy crisis,” Energy Minister Kostas Skrekas said on TV, the adminsitration already having put up 8 billion euros ($7.94 billion) in state power aid and other measures to help households, businesses and farmers pay electricity and gas bills.
The subsidies will cover 94 percent of the costs of the bills for households as electricity now costs 639 euros ($634.01) per megawatt hour and 89 percent for small and medium-sized firms, Skrekas said.
Greece already had capped payments to power producers to reflect their real production costs, effectively scrapping a surcharge on electricity bills, with proceeds earmarked to help it finance power subsidies, said Reuters.
“We are determined to continue the policy of protecting consumers, which is made possible thanks to the prudent and effective economic policy,” he said.
Greece is counting on revenues from what could be a record-breaking tourism year to help pay the cost of the subsidies as Mitsotakis is trying to avoid a voter backlash about the soaring bills.
He is set to announce handouts in his Sept. 10 address to the Thessaloniki International Fair (TIF) which is traditionally used to make promises and offer benefits to voters, more critical this year during record inflation too.
Another option is for the government to revise its estimate of the primary fiscal surplus, which excludes debt costs, to more than 2 percent of the annual Gross Domestic Product (GDP) of 201.88 billion euros ($200.3 billion.)
But that, the paper said, could jeopardize Mitsotakis’ plans to speed an economic recovery during the waning COVID-19 pandemic and put Greece back into investment grade ratings to reduce market borrowing costs.