The Haizum Italian Insider Report is a monthly news service that monitors the most relevant issues in Italy. This document focuses on political, Economical, and Strategic matters, taking into account the role of Italy within the European Union, the MENA region, and Transatlantic Relations. The report will deliver clever insights by leveraging Haizum’s deep connections in the national institutional ecosystem.
Reading Time: 15 Minutes
The Italian Government has imposed conditions on the sale of the Isab refinery by Lukoil to Goi Energy, including guaranteeing employment levels, investing in the Priolo plant, making environmental commitments, and banning crude Russian oil for 10 years due to the strategic importance of the Priolo refinery. Italy is also planning to establish ChipsIT, an R&D center dedicated to semiconductor design.
Meanwhile, London has awarded over £600m to a British consortium for the development of the Global combat air program project. Italy is playing the trilateral card with the president of Somalia and the Ethiopian premier in preparation for the Italy-Africa interGovernmental summit in October. Italian ports have an opportunity to become a crucial logistics hub in the Mediterranean between North Africa and continental Europe.
ExxonMobil Italiana Gas and Qatar Terminal Company Limited are planning to exit from the Rovigo regasification plant. It seems that Paolo Ciocca has been appointed the new Chairman of Open Fiber. The FS Group led by Luigi Ferraris has reported a positive trend in its financial report, with a 12% growth in operating revenues in 2022 compared to the previous year, and a 5% increase in net income.
The Chinese Government’s petrochemical and fertilizer conglomerate Sinochem is the largest shareholder in Pirelli with 37%, prompting the Italian Government to look for ways to reduce its influence. Finally, there have been new bids for Netco, Tim‘s network assets, with CDP Macquarie reportedly putting up €19.3bn.
Elly Schlein announced live on Instagram the twenty members of the new political secretariat of the PD – Democratic Party;
Alessandro Alfieri: Reforms and NRRP, Davide Baruffi: Local Entities, Marta Bonafoni: Coordinator of the secretariat, third sector and associationism, Stefania Bonaldi: Public administration, professions and innovation, Annalisa Corrado: Ecological conversion, climate, green economy and Agenda 2030, Alfredo D’Attorre: University, Marco Furfaro: Responsible for policy initiatives, countering inequalities, welfare, Maria Cecilia Guerra: Labor, Camilla Laureti: Agricultural policies, Marwa Mahmoud: Participation and political education, Pierfrancesco Majorino: Migration policies and Right to Housing, Irene Manzi: School, childhood education, education, educational poverty, Antonio Misiani: Economy, finance, business and infrastructure, Giuseppe Provenzano: Foreign affairs, Europe, international cooperation, Vincenza Rando: Countering mafias, legality and transparency, Sandro Ruotolo: Information, culture, cultures and memory, Marco Sarracino: Territorial cohesion, South and inland areas, Marina Sereni: Health and health care, Debora Serracchiani: Justice, Igor Taruffi: Organization Responsible, Alessandro Zan: Rights, Chief Secretary of National Secretary Elly Schlein: Giovanni Gaspare Righi, Spokesperson for National Secretary Elly Schlein and Head of Communication of the Democratic Party: Flavio Alivernini.
The Isab refinery will be sold by Russian Lukoil to Cypriot Goi Energy, but the Government has imposed conditions. The deal will be worth 1.2 bln euros. The Government’s attention is due to the strategic importance of the Priolo refinery, which refines 10.6 mln tons of crude per year and covers nearly a quarter of Italy’s gasoline needs. In addition, the company employs a thousand workers directly. There is talk of a 10-year ban on crude oil of Russian origin, even if it is reprocessed or “recycled” in later stages. The other requirements would be to guarantee employment levels, investment in the Priolo plant, and environmental commitments.
The Government is reportedly planning ChipsIT, an R&D center dedicated to the design of semiconductors. It should be established in Pavia, with branches in Bologna and Catania. ChipsIT is not yet mentioned in any official document made public. The last financial bill approved at the end of the year, between the folds in Article 74-bis, provides a foundation called the “Italian Center for the Design of semiconductor integrated circuits.” The text states that “for the establishment of the Foundation and its operation, a capital expenditure of 10 mln euros for the year 2023 and 25 mln for each of the years from 2024 to 2030 is authorized. The Ministry of Economy and Finance, the Ministry of Business and Made in Italy, and the Ministry of University and Research are in charge of the project. Supervision of the foundation is assigned to the Ministry of Business and Made in Italy.
London has awarded more than six hundred mln pounds to the British consortium working on the fighter aircraft of the future, Gcap, led by BAE Systems and involving Leonardo Uk and Mbda Uk.
The Global combat air program project envisages the development of an integrated combat air system, in which the main platform, the more properly understood aircraft, equipped with a human pilot, is at the center of a network of remotely piloted aircraft with different roles and tasks, from reconnaissance, to combat support, controlled by the central node and embedded in an ecosystem capable of multiplying the effectiveness of the system itself. The program was launched in December 2022, when the Governments of Rome, London, and Tokyo agreed to develop a next-generation air combat platform by 2035 jointly. The British funding follows just days after the Italian Defense Ministry launched the Gcap acceleration initiative to accelerate the development of technologies related to the Global combat air program.
Contracts have been awarded for the construction and services of the future Iride Earth Observation satellite constellation. More than 47 companies from the national aerospace industry will be on board. With a total budget of about 1.1 bln euros, the satellite constellation, which will represent the most important satellite program for Earth Observation, has the Italian Space Agency (Asi), the ESA support, and the resources of the NRRP at the forefront. In addition to the role of companies in the national space industrial fabric, it is significant to highlight how ten different administrations, representing about 33% of the national GDP, will also join the program and will use the data made available by Iride in the near future.
The positive reactions of the two interlocutors may be a good viaticum toward the October appointment when the Italy-Africa interGovernmental summit will be held. Giorgia Meloni, Hassan Sheikh Mohamud, and Abiy Ahmed are the leaders of the three countries standing behind the project called the Horn of Africa. The Italian premier pushes for a trilateral dialogue with the presidents of Somalia and Ethiopia, in the knowledge that the ramifications of the Mattei Plan provide an entirely new framework for Italy.
The Prime Minister, accompanied by Deputy Foreign Minister Edmondo Cirielli, also made a stop at the Italian state school ‘Galileo Galilei’ in Addis Ababa, the largest Italian school abroad in terms of the number of students. The presence of the president of the African Union, Moussa Faki Mahamat, is significant in this direction as if to close a ‘political’ circle after the visit a month ago to Kenya of the President of the Republic, Sergio Mattarella, demonstrating Italy’s great attention to this side.
As first undersecretary to the Prime Minister’s Office, then Minister of economic development, and now Minister of Economy, Giancarlo Giorgetti, represents an element of pro-Atlantic continuity in Italian Governments. Giorgetti was in Washington to attend the Spring Meeting of the International Monetary Fund, which will bring together the economy Ministers of the most developed countries.
Around it, a series of meetings of great strategic value. Among them, there was one with Janet Yellen, U.S. Treasury secretary, at a roundtable discussion. When Giorgietti was at Economic Development, he worked with Gina Raimondo, a very important figure in the Biden administration and author of the Chips Act, on the topic of supply chain security, semiconductors, and the possibility of attracting Intel investment to Italy. Also of note is the Niaf (National Italian American Foundation) award given to Giorgetti, as well as his lecture at the Council of foreign relations and his active role with the U.S. Chamber of Commerce in Italy.
Italy can become a logistics hub in the Mediterranean between North Africa and continental Europe. Slowing globalization, fading wage differences with China, and a trend toward friend-shoring are making Mediterranean ports increasingly strategic. While the share of container traffic in Europe intercepted by Northern-Range ports fell from 46% to 38% between 2008 and 2021, that of Mediterranean ports rose from 35% to 44%.
Of great importance in this perspective is the leadership that Italian ports have been able to develop in short-sea shipping, a mode of transport fully in line with the needs of regional trade. A particularly relevant segment within short sea shipping is Ro-Ro (that is a way of cargo shipping that comes from the expression “roll-on/roll-off”, which describes a vessel transporting wheeled cargo, be it cars, trucks, buses, trailers, or even industrial vehicles). In this sector, Italy boasts an absolute record: 7 of the top 10 European Ro-Ro ports in the Mediterranean, are located in Italy.
A new squeeze comes for spending by Ministries, but the Government also ensures resources for contract renewals. The DEF (Economic and Financial Document) goes into detail about the measures the Government has in pipeline for the coming years. The forecasts included in the DEF are extremely conservative. The full implementation of the NRRP, as estimated by the DEF, would give a boost to GDP of +3.4% more at the end of the plan. But there are variable risks such as a new rise in energy commodities.
In February, general Government debt increased by 21.6 bln from the previous month to 2,772.0 bln. The increase was due to requirements (12.9 bln) and an increase in Treasury cash and cash equivalents (8.6 bln, to 43.3 bln). In February, tax revenues recorded in the state budget totaled 34.9 bln, down 3.0% (1.1 bln) from the same month in 2022. In the first two months of the year, tax revenues totaled 79.1 bln, up 4.5% (3.4 bln) from the same period last year.
In February, Istat recognizes, for the second consecutive month, a cyclical decline in the seasonally adjusted index of industrial production. The decrease is 0.2% compared to January, and “the negative intonation” is widespread across almost all major industries, with the exception of energy (+0.2%). Adjusted for calendar effects, the overall index declines in trend terms by 2.3% compared to February 2022.
Istat underlines that, despite the widespread negative intonation in February, “the overall cyclical trend in the average of the last three months, however, remains positive” for the industry output.
ExxonMobil Italiana Gas (ExxonMobil Group) and Qatar Terminal Company Limited (an affiliate of Qatar Energy) are planning to exit the Rovigo regasification plant. Non-binding bids for 70% of Adriatic Lng, the company behind Italy’s largest LNG regasification plant, are expected to reach the table of advisor Rothschild by the first week of May. The match promises to be very crowded, given the strategic importance of the asset, which currently has a capacity of 9 bln cubic meters per year. Some 15 major international funds would be in the running. In addition to some players whose presence is already known, such as Macquarie, the division of Morgan Stanley specialized in infrastructure and energy, Igneo Infrastructure Partners group, there would also be giants such as BlackRock, KKR, and Energy Infrastructure Partners.
The share that will be put up for sale will depend on the intentions of Snam, the company’s sole Italian shareholder, which has a right of first refusal on 100% of the shares but is expected to decide to go up to a maximum of 30%. From the outset, Snam’s intention not to fully exercise its right of first refusal seemed clear.
Very early anticipations gave Stefano Donnarumma as ENEL CEO, coming from Terna. However, the pressure for the list of top executives from Poste, Leonardo, and Eni (in addition to Terna and ENEL) increased. There was actually a problem with ENEL. Forza Italia and Lega immediately bet on the Paolo Scaroni-Flavio Cattaneo tandem as Chairman and CEO. CDP‘s management got in touch with Meloni’s right-hand man, Giovanbattista Fazzolari. At the urging of CEO Dario Scannapieco, Enrico Resmini, CEO of CDP venture capital, moved to free up a spot for Donnarumma.
Paolo Ciocca is the new Chairman of Open Fiber, replacing the resigning Barbara Marinali. Ciocca, a note from the company explains, was co-opted as a board member and simultaneously appointed Chairman. Ciocca served as Commissioner of the National Commission for Companies and the Stock Exchange (CONSOB) from Feb. 12, 2018, to March 31, 2023. He previously served as deputy director general of the Security Information Department (DIS). From 2002 to 2007, he held senior positions at the Mef, where he was also director general of Finance. His resume also includes experience at Isvap, Bank of Italy, and positions at the UN and OECD.
Three lists of candidates appear to be filed for the change of ENEL’s board of directors, which will be renewed by the shareholders’ meeting scheduled for May 10, 2023, in a single call. A first list was submitted by the Ministry of Economy and Finance, which holds about 23.58% of ENEL’s capital; a second list was submitted by a grouping of asset management companies and other institutional investors, which together hold about 1.86% of ENEL’s capital; and a third list was submitted by Covalis Capital LLP and Covalis (Gibraltar) Ltd.
Covalis is aiming to attract the votes of other institutional investors (it aspires to get BlackRock’s and skeptics’ votes on Assogestioni’s list) to count more within the group’s future board.
To succeed in getting all of its list nominated, the fund would have to get at least 24% of the capital to join, given that ENEL is the only publicly listed company in which the state has fallen to 23.6%, below the minimum takeover bid threshold (25%). The point is that large U.S. funds would have to join by placing themselves in antithesis to the Government, an unlikely scenario. At that point the Government could resort to Golden Power, although not expendable at this stage: the submission of an alternative list, in fact, is allowed by the rules and bylaws.
After Covalis another investment management firm, Mondrian Investment Partners, said it was “extremely disappointed with the total lack of transparency in the appointment process and criteria” of ENEL’s new board. Mondrian owns 1.7% of ENEL.
Fincantieri overpaid Vard, the Norwegian company acquired in 2013 by the Trieste-based group, according to the CEO Pierroberto Folgiero. This is what emerges in the recent interview with the Corriere della Sera.
Last March 3, the Trieste-based shipbuilding group, through its subsidiary Vard, signed a contract with a new customer, Edda Wind, for the construction of four Commissioning Service Operation Vessels (CSOVs) for deep-sea activities that enable the construction of platforms and energy plants. This is the sixth offshore wind contract concluded by Vard in the past three years. In the meantime, the Trieste-based group’s consolidated financial statements are weighed down by “the Vard group’s actual negative economic results“, as stated in the financial statement audit by Deloitte. Fincantieri reported rising revenues last year, but also a loss of 324 mln euros.
The group ended 2022, as expected, with a negative result of 324 mln euros (positive 22 mln euros in 2021). The net result was weighed down by non-recurring charges, from the impact of Covid to cost overruns. But write-downs related to Vard Cruise’s goodwill also impacted.
Good news for the FS Group emerged from the Annual Financial Report, approved on April 6 by the Board of Directors. In 2022 there was a 12% growth in operating revenues, reaching 13.7 bln euros, +1.4 bln compared to 2021. A positive trend for the Group, plus 5%, also for net income, which is 202 mln euros. More than 300 tenders launched in infrastructure for about 26 bln euros, meeting the timeframe for the NRRP.
The operating margins of the Group led by Luigi Ferraris, with EBIT and EBITDA increasing respectively by 36% and 17% in 2022, and, net of Covid rebates reduced by about 800 mln compared to 2021, by 112% and 119%. This is also thanks to a new governance of the Group, which is divided into four business hubs. Under the NRRP, all scheduled deadlines have been met, including the awarding of works on the Naples–Bari rail infrastructure. The awarding of Ertms works (the European digital signaling system for rail traffic management) worth 3.27 bln euros, and those included in the plan for the Palermo–Catania line.
Giorgia Meloni’s Government is looking for a way to reduce the influence of Sinochem, a Chinese state-owned petrochemical and fertilizer conglomerate, on Pirelli, in which it is the largest shareholder with 37%. Given the Chinese presence, Pirelli – according to golden power rules – will have to get most business decisions approved by the Italian Government. Pirelli’s other shareholders are the Silk Road Fund, the Chinese Government’s investment fund, with 9%; LongMarch, a Chinese tire company, with 3.6%; and Brembo, an Italian brake equipment company, with 6%.
In mid-February, the Chinese holding company Sinochem was considering an exit from Pirelli. But the news was denied. Pirelli’s shareholders are bound by a shareholders’ agreement renewed a year early last year, which will take effect in the spring with the approval of the 2022 accounts by the shareholders’ meeting and expire in 2026. The agreement establishes governance and management rights that give the Chinese the chairmanship, now held by Li Fanrong, and the Italian shareholders the operational management, exercised by executive vice Chairman and CEO, Marco Tronchetti Provera, and Giorgio Bruno, deputy CEO.
Recounting the numbers the automotive group has posted over the past 12 months are Chairman John Elkann, and CEO Carlos Tavares, at the annual general meeting of shareholders. “We posted solid financial results in 2022 that set us apart from our competitors with a combination of scale and double-digit growth”, explained Elkann. “We are among the top three in our industry in terms of revenues and margins, and we reached the top spot in terms of absolute operating profit, at 23.2 bln euros.”
Stellantis has already achieved “a very gratifying level of net synergies, amounting to 7.1 bln euros, much higher than the commitment made when the merger was decided”, the manager further explained. “We have gained significant momentum on electrification,” Elkann added, citing the “23 electrified models already on the market.” More are on the way, eventually doubling the offer at the end of 2024, with 47 models, rising to 75 “at the end of the decade.”
New bids for Netco, Tim’s network assets. CDP Macquarie would have put up 19.3 bln from the previous 18 or so, for KKR the ante rises from 20 bln to 21 bln. The two offers not only come far short of the 31 bln claimed by first partner Vivendi but also raise fears that not even Tim’s May 4 board meeting may accept either of the offers as they stand.
Maximum state of alert from the labor unions. Fistel Cisl denounces the Government’s lack of attention to the issues of the Tlc crisis that is literally exploding in Italy with a series of layoffs announced by the main telcos. Cgil and Slc Cgil highlight the real risk of losing NRRP funds linked to ultrawideband and 5G infrastructure projects.
The financial statements as of December 31, 2022, have been approved, which closed with a net loss of 2.9 bln euros covered by withdrawal from reserves. The confirmation as directors of Giulio Gallazzi and Massimo Sarmi. However, the third Director was not appointed, as the proposed nominations did not obtain the necessary majorities. Rejected instead was the proposed compensation package for the company’s CEO. On this issue, Vivendi had pre-announced a vote against it, only to abstain.
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