Italy plans to ask the European Union for permission to redirect pandemic reconstruction funds it’s unable to spend toward programs strengthening its energy sector, according to a senior government official.
(Bloomberg) — Italy plans to ask the European Union for permission to redirect pandemic reconstruction funds it’s unable to spend toward programs strengthening its energy sector, according to a senior government official.
The government of Prime Minister Giorgia Meloni wants to overhaul €192 billion ($208 billion) in EU grants and loans, after realizing some projects won’t be completed fast enough to meet a deadline in 2026, the official said, asking not to be named because negotiations are confidential. Rome aims to present a revised plan by end-June.
To do so, Italy wants to draw on €2.7 billion of fresh funds from the REPowerEU strategy, which seeks to reduce reliance on Russian gas and speed the transition to clean energy, together with €3 billion to €6 billion from other European reserve funds.
On top of that, the official says Italy will use some money from the pandemic recovery fund, known as Next Generation EU, that had been originally earmarked for projects that are now running behind schedule.
Italy was assigned the lion’s share of some €800 billion in EU funds but it is struggling to allocate and spend the money as quickly as planned, with red tape delaying the process. Higher inflation and Russia’s invasion of Ukraine have also changed the economic backdrop to the spending plan.
Italy’s updated NGEU plan envisions boosting spending on energy infrastructure and efficiency as well as reducing the overall number of projects, according to the official. Meloni’s government plans to delay some of the current plan’s targets and projects and to reallocate funds to longer-term programs, the official added.
The changes will allow Italy to improve its success rate in the use of EU funding in general, which has always been limited, and contribute to its goal of investing in greater energy autonomy, according to the source.
In March, EU affairs minister Raffaele Fitto said Italy wouldn’t be able to complete some of the projects in time for the EU’s next deadline in June. The country has already received €67 billion from the bloc.
A month later, the European Commission, the EU’s executive arm, made clear that it was willing to review Italian proposals to adjust the terms of recovery fund projects, but only on a case-by-case basis.
–With assistance from Chiara Albanese and Jorge Valero.
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