Portugal will cut subsidies to the energy sector by capping “excessive” energy tariffs, saving consumers 1.8 billion euros by 2020 and boosting competitiveness in the country’s struggling economy, the government said on Thursday.
The measures are part of the terms of an EU/IMF bailout that Portugal agreed a year ago. The country is grappling with its deepest recession since the 1970s after the government implemented painful spending cuts and tax hikes, including on energy bills.
“For the first time the state is reducing costs in the energy sector,” Economy Minister Alvaro Santos Pereira told reporters. “All the power producers will have to contribute.”
As a result of the measures to cap the tariffs, consumers’ electricity bills will drop by 5 percent, he said, adding that without the changes, bills would soar by 40 percent by 2020.