Electric shock

10 Dec 2013 By Fiona Maharg-Bravo

The country’s energy sector has accumulated a 26 billion euros deficit due to the gap between production costs and consumer bills. Now the government is pulling the money it had promised to reduce the shortfall this year. Its constant flip-flops are worrying investors.

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The Spanish government will work with the country’s utilities on how to fund a 3.6 billion euro shortfall created this year by the gap between the cost of electricity and what the utilities are allowed to charge. The government recently withdrew funds to help finance the hole. The companies had accumulated a combined deficit of 26 billion euros by the end of 2012 and the government had allocated an extra 3.6 billion euros to stop it widening further in 2013.

The Spanish Treasury Ministry said it would create a working group with utilities and the Industry Ministry to come up with a solution similar to a previous bond-buying programme that transferred the companies’ debt to a state-backed fund known as FADE.

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