By Sergio Goncalves

LISBON (Reuters), -Portugal’s Premier Minister Antonio Costa asked Tuesday for a minimum reference price to be established within the European Union. Also, he demanded that energy product value added tax be immediately reduced in order to safeguard consumers against rising prices.

After record-breaking gas prices rose following Russia’s invasion, EU leaders will discuss possible new measures during a summit meeting in Brussels on March 24-25.

It is imperative to act immediately. “There are many solutions… the solution to the gas price cap is well-balanced,” he said to Portugal’s parliament in preparation for the summit.

Spain and Portugal last week said they had drawn up proposals to impose a 180-euro-per-megawatt-hour (MWh) price cap for electricity, but a Spanish Energy Ministry source said on Monday that Madrid would prioritise instead an idea to decouple the price of electricity from that of gas.

Costa claimed that Spain has not deviated from its initial intent, but that any limit should not affect Europe’s natural resources. “This could impact many European countries such as Germany,” he said.

Costa claimed that “we have been working together with other member state and the European Commission” on the issue, calling for EU joint procurement mechanisms “not just to procure energy, but also various essential agro-food components, such as fertilizers.”

Portugal already requested that Brussels allow for a temporary decrease in VAT on energy products. Costa stated that the European Commission should grant all European countries this option.

Costa stated that the cap was necessary to prevent electricity prices from being “contaminated” by rising gas prices. All generators must sell electricity at wholesale prices, and the cost to produce it is determined by their marginal production costs. At the moment this is gas-fired power plant.