Paying Italian Towns’ Power Bills Could Run Up State Debt

(Bloomberg) -- A prolonged increase in energy prices could have a negative impact on Italy’s local administrations forcing the government to step in to help keep offices, hospitals and schools functioning properly, Finance Ministry Undersecretary Maria Cecilia Guerra said.

“I think it would be useful to look at the impact on local administrations because the increase in energy costs could be hard on them,” Guerra said in an interview in Rome. “The government may have to intervene.”

Politicians across Europe are looking at ways to help businesses and citizens deal with energy costs due to tight supply and rising natural gas prices. Italy plans to spend around 3.5 billion euros ($4.1 billion) to protect consumers from the increase.

The problem will however also affect the myriad state-run schools, hospitals and offices that are often on the books of local administrations, some of which are small and already indebted, Guerra said. If prices remain high for a long time the towns will need help.

Italy is particularly vulnerable as it is relies on imports to meet over 70% of its energy needs, with almost 40% coming from natural gas, according to official data.

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