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Trade and other receivables | 12 Months Ended
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Dec. 31, 2018
Disclosure Of Trade And Other Receivables [Abstract] |
Disclosure of trade and other receivables [text block] | 7 Trade and other receivables As of January 1, 2018, the effects of the application of IFRS 9 and IFRS 15 are the following:
(€ million) |  | Trade and other receivables
Amount as of 31 December 2017 |  |  | 15,421 |
Changes in accounting policies (IFRS 9) |  |  | (427 | )
Changes in accounting policies (IFRS 15) |  |  | (372 | )
Reclassification to other current asssets (IFRS 15) |  |  | (466 | )
Amount as of 1 January 2018 |  |  | 14,156 |
The adoption of IFRS 9 determined an increase in the provision for doubtful accounts of  € 427 million in application of the expected loss model. The application of IFRS 15 determined a decrease in other receivables for € 372 million due to the fact that Eni now adopts the sales method versus the entitlement method previously adopted under the previous accounting policy as disclosed in note 3 – Changes in accounting policies. In applying IFRS 15, € 466 million of assets related to lifting imbalances accounted for using the sales method have been reclassified to other current assets. More information about the application of IFRS 9 and IFRS 15 is disclosed in note 3 — Changes in accounting policies. The following is the analysis of trade and other receivables:
(€ million) |  | December 31, 2018 |  |  | December 31, 2017
Trade receivables |  |  | 9,520 |  |  |  |  | 10,182 |
Receivables from divestments |  |  | 122 |  |  |  |  | 597 |
Receivables from operators in E&P activities |  |  | 3,024 |  |  |  |  | 3,369 |
Other receivables |  |  | 1,435 |  |  |  |  | 1,273 |
|  |  | 14,101 |  |  |  |  | 15,421 |
Generally, trade receivables do not bear interest and provide payment terms within 180 days. Trade receivables decreased by €662 million, of which €641 million related to the Gas & Power segment. At December 31, 2018, Eni sold without recourse trade receivables due in 2019 for €1,769 million (€2,051 million at December 31, 2017 due in 2018). Derecognized receivables related to the Gas & Power segment for €1,419 million and to the Refining & Marketing and Chemical segment for €350 million. Receivables from divestments decreased by €475 million due to: (i) the collection of the price installments related the sale of 10% and 30% interests in the Zohr asset in Egypt made in 2017 respectively to BP and Rosneft for a total amount of €433 million. An additional installment relating to the transaction with BP will be collected in June 2019 (€119 million); (ii) the collection for €153 million of the third and last instalment of a receivable on the divestment of a 1.71% interest in the Kashagan project to the local partner KazMunayGas. Amounts receivable from operators in exploration and production projects included amounts owed by partners in Nigeria for €977 million (€1,507 million at December 31, 2017). This latter comprised an amount of  €681 million in large part overdue (€713 million at December 31, 2017) owed by the Nigerian national oil company NNPC in respect of the contractual recovery of the expenditures incurred at certain projects operated by Eni. During the year, the Company recovered €140 million of the overdue amount due to the implementation of the “Repayment Agreement” agreed with the counterparty, whereby Eni is to be reimbursed through the sale of the profit oil attributable to NNPC in certain rig-less petroleum initiatives with low mineral risk. Based on Eni’s Brent price scenario, the reimbursement will be accomplished over a time horizon of three to five years. The overdue receivables are stated net of a discount factor. In addition, a receivable relating to the recovery of a disputed amount of expenditures due to the same counterpart was completely written down (€153 million at December 31, 2017). Receivables from others comprised the recoverable value amounting to € 300 million of certain overdue trade receivables towards the state-owned oil company of Venezuela, PDVSA, in relation to gas equity volumes supplied by the joint venture Cardón IV, equally participated by Eni and Repsol. The two shareholders purchased those receivables from the venture in 2016 and in 2018. The proceeds from the sale were utilized to reimburse part of the financing loan provided by the same shareholders to fund the development of the gas project reserves. The recoverable amount of those receivables was estimated considering the lifetime expected credit losses which were evaluated based on a financial model built around empirical evidence and outcomes from a thorough review of sovereign defaults. Risks associated with the complex financial outlook of the Country and the deteriorated operating environment were appreciated in the recoverability estimation by assuming a deferral in the timing of collection of future revenues and overdue credit amounts. Trade and other receivables stated in euro and US dollars amounted to €7,100 million and €6,119 million, respectively. Credit risk exposure and expected losses relating to trade and other receivables has been prepared on the basis of internal ratings as follows:
|  | Performing receivables |  |  | Defaulted |  |  | Eni gas e luce |  |  |
(€ million) |  | Low risk |  |  | Medium Risk |  |  | High Risk |  |  | receivables |  |  | customers |  | Total |
December 31, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Business customers |  |  | 2,454 |  |  |  | 3,585 |  |  |  | 1,152 |  |  |  |  | 1,350 |  |  |  |  |  |  |  | 8,541 |
National Oil Companies and public administrations |  |  | 1,292 |  |  |  | 157 |  |  |  | 672 |  |  |  |  | 2,217 |  |  |  |  |  |  |  | 4,338 |
Other counterparties |  |  | 1,494 |  |  |  | 77 |  |  |  | 156 |  |  |  |  | 271 |  |  |  | 2,374 |  |  |  | 4,372 |
Gross amount |  |  | 5,240 |  |  |  | 3,819 |  |  |  | 1,980 |  |  |  |  | 3,838 |  |  |  | 2,374 |  |  |  | 17,251 |
Allowance for doubtful accounts |  |  | (9 | ) |  |  | (3 | ) |  |  | (44 | ) |  |  |  | (2,237 | ) |  |  | (857 | ) |  |  | (3,150 | )
Net amount |  |  | 5,231 |  |  |  | 3,816 |  |  |  | 1,936 |  |  |  |  | 1,601 |  |  |  | 1,517 |  |  |  | 14,101 |
Expected loss (% net of counterpart risk mitigation factors) |  |  | 0.2 |  |  |  | 0.1 |  |  |  | 2.6 |  |  |  |  | 62.5 |  |  |  | 36.1 |  |  |  |  |
Eni has classified its business customers and the associated commercial or industrial exposures based on an individual assessment of the credit and the counterparty risks. Business customers other than National Oil Companies (NOC) and public administrations, each of whom has undergone an individual credit evaluation, have assigned a probability of default calculated based on internal ratings which factor in: (i) a full assessment of each customer profitability, financial condition and liquidity and business a financial prospects on an ongoing basis; (ii) history of the contractual relationship (timeliness in invoice payment, number of claims, etc.); (iii) presence of mitigation factors of credit risk (e.g. securitization package, insurance against the credit risk, guarantee from third parties, etc.); (iv) other specialized pieces of information obtained by the Company’s business commercial function or by specialized info-providers; (v) industrial and market trends. Internal ratings and the probability of default are constantly updated by means of back-testing analysis and risk assessment of the current credit portfolio. The loss given default associated with those industrial customers is estimated by the business based on the past experience in credit recoverability; in the case of defaulting customers, loss given default is estimated based on the recovery rates obtained in situations of credit restructurings or litigation procedures. The probability of default associated with NOCs and public administrations is estimated based on the country risk premium incorporated in the risk-adjusted weighted average cost of capital utilized by the Company to perform the impairment review of its fixed assets. The loss given default of these business partners is estimated based on historical averages of delays in collecting overdue receivables, substantially assessing the time value of money. The resulting loss given default is adjusted to factor in any existing mitigation factor. In case of particular market conditions or sovereign defaults, the expected loss associated with NOCs is re-rated based on the empirical evidence and outcomes obtained from restructuring of sovereign debts considering the specificities of trading relationships with energy companies. Customers of Eni gas e luce have been grouped into homogeneous clusters with different credit risk and probability of default which have been estimated based on past experience on credit collection, systematically updated and, in case of particular market conditions, adjusted to take into account expected market and credit trends in any given cluster. The exposure to credit risk and expected losses relating to customers of Eni gas e luce was assessed on the basis of a provision matrix as follows:
|  | Ageing
( € million) |  | Not-past due |  | from 0 to 3 months |  | from 3 to 6 months |  | from 6 to 12 months |  | over 12 months |  | Total
December 31, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Customers – Eni gas e luce: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- Retail |  |  | 575 |  |  |  |  | 49 |  |  |  | 34 |  |  |  |  | 64 |  |  |  | 554 |  |  |  | 1,276 |
- Middle |  |  | 449 |  |  |  |  | 43 |  |  |  | 13 |  |  |  |  | 29 |  |  |  | 349 |  |  |  | 883 |
- Other |  |  | 207 |  |  |  |  | 2 |  |  |  | 1 |  |  |  |  | 2 |  |  |  | 3 |  |  |  | 215 |
Gross amount |  |  | 1,231 |  |  |  |  | 94 |  |  |  | 48 |  |  |  |  | 95 |  |  |  | 906 |  |  |  | 2,374 |
Allowance for doubtful accounts |  |  | (20 | ) |  |  |  | (18 | ) |  |  | (18 | ) |  |  |  | (56 | ) |  |  | (745 | ) |  |  | (857 | )
Net amount |  |  | 1,211 |  |  |  |  | 76 |  |  |  | 30 |  |  |  |  | 39 |  |  |  | 161 |  |  |  | 1,517 |
Expected loss (%) |  |  | 1.6 |  |  |  |  | 19.1 |  |  |  | 37.5 |  |  |  |  | 58.9 |  |  |  | 82.2 |  |  |  | 36.1 |
Trade and other receivables are stated net of the valuation allowance for doubtful accounts which has been determined considering the counterparty risk mitigation factors amounting to € 3,072 million:
(€ million) |  | Trade and other receivables
Carrying amount at December 31, 2017 |  |  | 2,639 |
Changes in accounting policies (IFRS 9) |  |  | 427 |
Carrying amount at January 1, 2018 |  |  | 3,066 |
Additions on trade and other performing receivables |  |  | 126 |
Additions on trade and other defaulted receivables |  |  | 372 |
Deductions on trade and other performing receivables |  |  | (189 | )
Deductions on trade and other defaulted receivables |  |  | (532 | )
Other changes |  |  | 307 |
Carrying amount at December 31, 2018 |  |  | 3,150 |
Carrying amount at December 31, 2016 |  |  | 2,303 |
Additions |  |  | 927 |
Deductions |  |  | (454 | )
Other changes |  |  | (137 | )
Carrying amount at December 31, 2017 |  |  | 2,639 |
Additions to allowance for doubtful accounts on trade and other performing receivables related for € 108 million to the Gas & Power segment, particularly in the retail business. Additions to allowance for doubtful accounts on trade and other defaulted receivables related for € 291 million to the Exploration & Production segment and in connection with receivables for the supply of equity hydrocarbons to State-owned companies and other commercial partners. Utilizations of allowance for doubtful accounts on trade and other performing and defaulted receivables amounted to € 721 million and mainly related to the Gas & Power segment for € 613 million, in particular utilizations against charges of  € 579 million mainly in the retail business. The mitigation measures regarding the counterparty risk executed by the Company, including better customer selection, allowed to reduce the incidence of unpaid amounts on retail sales of gas and power to physiological levels. Net (impairment losses) reversals of trade and other receivables are disclosed as follows:
(€ million) |  | 2018
Net (impairment losses) reversals of trade and other receivables |  |  |  |  |
New or increased provisions |  |  | (498 | ) |
Credit losses |  |  | (37 | ) |
Reversal of unutilized provisions |  |  | 120 |  |
|  |  | (415 | ) |
With reference the receivables for the year 2017 stated according to the valuation criteria in force before the application of IFRS 9 “Financial instruments”, the analysis of the 2017 ageing of trade and other receivables was as follows:
|  | December 31, 2017
(€ million) |  | Trade receivables |  | Other receivables
Neither impaired nor past due |  |  | 8,800 |  |  |  | 4,604 |
Impaired (net of the valuation for doubtful accounts) |  |  | 567 |  |  |  | 31 |
Not impaired and past due: |  |  |  |  |  |  |  |
- within 90 days |  |  | 478 |  |  |  | 21 |
- from 3 to 6 months |  |  | 46 |  |  |  | 9 |
- from 6 to 12 months |  |  | 147 |  |  |  | 202 |
- over 12 months |  |  | 144 |  |  |  | 372 |
|  |  | 815 |  |  |  | 604 |
|  |  | 10,182 |  |  |  | 5,239 |
Because of the short-term maturity and conditions of remuneration of trade and other receivables, the fair value approximated the carrying amount. Receivables with related parties are disclosed in note 36 — Transactions with related parties.

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