Reduced natural gas consumption, not just in the industrial sector, but for households as well, is emerging as a key strategy in the government’s battle against the energy crisis as a very challenging winter approaches.
Government officials are looking to drastically reduce, or even eliminate, subsidies offered for natural gas – both state subsidies and gas utility DEPA subsidies – according to one proposal already being discussed.
Natural gas subsidies offered in Greece peaked in April at 40 euros per thermal MWh, double the level of the rate offered a month earlier. A total of 540,000 households, along with all business and industrial consumers, regardless of size, earnings or workforce, were eligible for these subsidies.
However, the country’s fiscal leeway has tightened, eroding the government’s ability for gas subsidy support packages worth 90 to 100 million euros per month.
At current gas price levels, support packages, as they stand, would exceed an annual cost of 15 billion euros, representing 7 percent of GDP.
Last April, when international gas prices were lower compared to current levels, the month’s gas subsidy support package – state and DEPA, combined – reached a total cost of 88.74 million euros.
Reducing or eliminating gas subsidies would serve as a disincentive for new gas connections, especially if gas prices remain high. However, such an initiative would place existing consumers under increased pressure, which could result in political cost. The next Greek legislative election will be held by July, 2023.