14 Dec, 2022 @ 17:15
1 min read

EXPLAINER: Why Spain’s 20 cents per litre fuel discount is nearing the end of the road

EXPLAINER: Why Spain's 20 cents per litre fuel discount is nearing the end of the rood
Image by Paul Brennan from Pixabay

SPAIN’S 20 cents per litre fuel bonus- introduced in April- is likely to be scrapped on December 31.

The measure was brought in to counter rising fuel prices in the wake of Russia’s invasion of the Ukraine.

The expensive measure was welcomed but now pump costs have fallen to levels not seen since February.

Depending on where you live in Spain, prices minus the subsidy are coming in as low as €1.50 per litre- a far cry from €2.00 and higher in June.

The bonus is scheduled to end on December 31 as part of the current package of ‘anti-crisis’ policies.

The government is working on a third set of ‘crisis’ measures and have made it clear they want to do something about food prices.

How that’s to be achieved is not known, but they’ll need to claw back cash from elsewhere, which makes the fuel subsidy an obvious target.

Finance Minister, Maria Jesus Montero, said this week that maintaining the 20 cent bonus was ‘not possible’ considering its cost, but he preferred to look at helping vulnerable groups.

A short term issue caused by a likely abolition will be the impact on the inflation rate.

November’s figure stood at 6.8%- far better than in other European countries, but if the fuel subsidy ends, that will impact(albeit temporarily) on the January rate, unless other anti-inflationary measures are taken.

The Spanish Confederation of Service Station Entrepreneurs (CEEES) says that with just over a fortnight left, there is no certainty of what will happen with operators needing to look at reprogramming tills and computers.

CEEES president, Jorge de Benito, said: “If from January the government wants to limit the bonus to citizens on low incomes, then it should have already told us how it intends to do it.”

He added that most of his members incurred costs with implementing the current subsidy and waiting for government cash week after customers had claimed the 20 cents bonus, thus putting g businesses out of pocket.

It is necessary to continue helping families, but the tax reduction would be the best alternative for everyone,” summarised Jorge de Benito.

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