BERLIN/BRUSSELS (Reuters) – Germany said on Tuesday it aimed to expand lending to energy firms at risk of being crushed by spiralling gas prices, the latest effort in Europe to rescue households and industry from an energy crisis sparked Russia’s invasion of Ukraine.
The European Union’s securities watchdog is also considering EU-wide measures to help energy firms struggling to find cash to meet rocketing collateral demands after they were caught out by the surging prices as Russia slashed gas sent to Europe.
Separate proposals from the European Commision to tackle the crisis are due to be announced on Wednesday, with EU energy ministers scheduled to hold an emergency meeting on Sept. 30 to discuss them.
The crisis is already weighing heavily on Europe’s economy, even before the onset of winter when industrial users could face rationing if gas reserves prove inadequate. Industry sentiment in the bloc’s economic powerhouse, Germany, has tumbled.
The German Finance Ministry said it wanted to boost state loans for energy firms by using credit authorisations created to offer relief in the COVID-19 pandemic, with a German newspaper putting the value at 67 billion euros ($68 billion).
Last week, VNG, one of Germany’s biggest importers of Russian natural gas, became the latest energy firm to ask the government for aid to stay afloat.
The German cabinet is expected to approve draft legislation for the boosted credit funds on Wednesday.
ENERGY SHORTAGES?
A draft of the Commission proposals, seen by Reuters, would impose a cap on the revenues non-gas fuelled generators can make from selling electricity, and force fossil fuel firms to share excess profits. Governments would be required to use the cash to help consumers and companies facing sky-high energy bills.
EU diplomats say there is broad support for the revenue cap for non-gas generators, as well as plans to impose electricity demand cuts. But countries are split over other ideas – including a gas price cap, which was not included in the draft Commission proposals.
Meanwhile, investor sentiment in Germany fell further than expected in September as concerns over the country’s energy supply increasingly weigh on the outlook for Europe’s largest economy.
“The prospect of energy shortages in winter has made expectations even more negative for large parts of the German industry,” said Achim Wambach, president of the ZEW economic research institute.
“The question now is how far down the economy can go – and where inflation can still go,” said LBBW bank senior economist Jens-Oliver Niklasch.
Separately, the CEO of Ukrainian state energy firm Naftogaz said on Tuesday he hoped to restore production thanks to the recent military successes.
Naftogaz produces the lion’s share of Ukraine’s gas, with output totalling 13.7 billion cubic meters (bcm) in 2021.
Source: Economy - investing.com
