Hoping to end trucker strike, Spain agrees $551 million transport aid package

© Reuters. Truckers stage slow march amid strike for better working conditions in Valencia, Spain, March 21, 2022. REUTERS/Eva Manez

MADRID (Reuters) - Spain's government agreed to pay 500 million euros ($551.35 million) in direct aid to the transport sector on Monday to help truck drivers weather surging fuel costs that have pushed some to strike and brought further chaos to supply chains.

"We are going to introduce a subsidy on the price of professional diesel so that this measure has a real and effective impact," Transport Minister Raquel Sanchez said after meeting with the National Road Transport Committee (CNTC).

She said the measure was in line with similar actions taken in France, Portugal and Italy and would take effect from April 1. The government will not reduce VAT - value added tax - on fuel.

The plan follows a consultation by the European Commission on a draft proposal for a state aid temporary crisis framework to support the EU economy in the context of surging global inflation, exacerbated by Russia's invasion of Ukraine.

Such support could be granted in any form, including guarantees, subsidised loans and limited grants to partially compensate companies, particularly intensive energy users, for energy price increases, the EU said earlier in March.

Faced with record diesel prices, a truck drivers and small truck owners group association known as the Platform for the Defence of Transport, went on strike last Monday to demand lower taxes and lighter regulations, with some protests turning violent.

"Diesel is the straw that broke the camel's back," Jose Hernandez, a representative for the Platform and a truck driver who lost his job, told Reuters at the time. His company stopped operating because the fees it earned didn't cover costs.

While the strike only involves a minority of drivers, it has caused huge traffic jams across the country, leading some factories to halt production as they could not guarantee deliveries would be received on time.

Juan Vieites, secretary general of the national association for fish producers, said the strike was paralysing the country, with the coastal regions of Galicia, Asturias and Andalucia the worst affected.

Vieites requested police intervention after striking transport workers pelted a truck that attempted to leave the port of Vigo with stones.

"Spain has to take action or we will have a huge problem on our hands," he said.

($1 = 0.9069 euros)