The Government is preparing to approve, expected this Tuesday in the Council of Ministers, the Royal Decree that will make temporary taxes on energy and banking companies permanent.
With this measure, Pedro Sánchez’s Executive tries to maintain the support of Sumarits partners in the Government, with whom it agreed to prolong the measure, which no longer has the approval of Brussels and fails to fulfill the promise made when it came into force, that it would be temporary.
The Minister of Economy, Carlos Body, defends that the taxes have served to cover the so-called “social shield”, which little by little is already being dismantled with the progressive withdrawal of aid measures. The Executive received nearly 2,400 million from the main energy companies after its entry into force between 2023 and 2024, a payment that is settled in arrears.
Its extension will be a setback for the industrial projects of the main oil companies located in our country, Repsol, Cepsa and BP. Repsol was the one that paid the most, close to 800 million in the last two years, while Cepsa closed 2023 with losses of 233 million due to the impact on its income.
The extension will be a hard blow for the refineries of these oil companies, spread throughout the country: Tarragona, Bilbao, Huelva, Castellón, Cartagena, Puerto Llano and La Coruña. The managers warn, both publicly and privately, to the Government, that They will be forced to paralyze their plans to reindustrialize these facilities.
The tax was approved for the years 2022 and 2023 as a result of the energy price crisis that resulted from the war in Ukraine. The context has changed significantly. At the height of the price crisis, gasoline and diesel rose above two euros per liter, compared to a current price of 1.5 euros/liter for gasoline and 1.38 euros/liter in the diesel, according to the latest data from the EU Oil Bulletin.
On the other hand, electricity also reached a historical peak of 544.98 euros/MWh in the market, while today’s average price was 80.18 euros/MWh. In addition to the softer price context, energy companies criticize the design of the tax, since it does not tax profits but rather the companies’ energy sales income. With the current structure, Energy companies with a turnover of more than 1,000 million a year pay 1.2% of their sales.
The change in context made many analysts and some of the main managers in the sector to think that the tax would be extinguished this year. This is the case of Josu Jon Imaz, CEO of Repsol, who assured that this measure was not going to be extended, as indicated during the conference with analysts after the presentation of the group’s semi-annual results.
Something similar was thought by the CEO of Endesa, José Bogas, who pointed out in November last year that the Government knows that very important investments will be necessary for decarbonization and, for that reason, the income tax on energy companies and banks it wouldn’t hold up. “We are aligned with the Government’s energy policy, but we need to have cash,” he warned.
Besides, Complaints about the so-called imposition are unanimous. The president of Iberdrola, Ignacio Galán, charged against the profits of the energy companies on February 24, since he considers that maintaining it “does not make any sense” and also criticized the large volume of taxes that exist in Spain.
Vulnerable consumers
The Government’s step forward to maintain the tax coincides with the proposal of a new package of direct aid to vulnerable energy consumers that the Ministry of Ecological Transition has already begun to prepare. The department of the still vice president, Teresa Riberahas already submitted to public consultation the draft Royal Decree regulating the granting of a direct subsidy to improve the protection of the rights of vulnerable consumers in the field of energy transition.
With this measure, the Executive wants to soften the impact that the normalization of electricity tolls – part of said social shield – will have on electricity bills starting in January. The extension of these taxes, however, has not had the full support of the Government. Vice President Ribera expressed her willingness to eliminate these taxes a few months ago. following Brussels’ request to withdraw interventionist measures in the energy market.
Repsol moves investments to Portugal
Repsol has fulfilled its promise to move investments to other countries due to the extraordinary tax on banking and energy companies. The multi-energy firm chooses Sines (Portugal) for the investment of the first of several green hydrogen projects for which they were looking for a location. The disbursement is not one of the largest planned by the oil company in this technology, since the destination will be an electrolyzer with 4 MW of consumption and 600 tons of annual hydrogen production that will require an expense of close to 15 million euros. .
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