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Small Italian utilities at risk as gas importers demand guarantees

·1-min read

By Giancarlo Navach

MILAN (Reuters) - Small energy utilities in Italy are struggling to secure gas from suppliers that increasingly demand collateral guarantees they are unable to provide, the head of an industry lobby said, warning that dozens of them were at risk of default.

Giordano Colarullo, head of Utilitalia, an association of 450 utilities providing energy, water and waste services, said as many as 70 companies could face bankruptcy in the coming months for failing to honour contracts with customers.

The companies in question have between 10,000 and 40,000 clients each, putting a total of around 500,000 households and small businesses such as shops and hairdressers at risk of seeing their power and energy service provider going bust.

"They can't get hold of the gas they would be selling to their clients this winter," Colarullo said.

The companies under threat buy gas and electricity from importers which they then resell on the domestic market, which Italy has in part liberalised.

But soaring gas prices as Russia curtails exports have prompted importers to request buyers post bigger collateral guarantees.

"These companies are being asked to provide guarantees but they have trouble securing help from banks, which have no intention of taking on the risk given how widespread the problem is," Colarullo said.

"In the meantime the importer will have sold the gas to somebody else," he added calling for the state to step in to provide guarantees.

Italy has budgeted 52 billion euros so far this year to shield firms and people from the impact of sky-high electricity, gas and petrol costs and plans to approve this week a further relief package worth around 13 billion euros.

(Reporting by Giancarlo Navach; writing by Elvira Pollina; Editing by Valentina Za and David Evans)