The measures include a new € 100 billion short-term loan program from state-owned development bank KfW for energy companies struggling to cover the extremely high insurance costs against higher oil and gas prices. The package will also provide € 7 billion in loans from KfW to boost liquidity to war-torn companies and provide further government guarantees for bank loans to companies with funding problems. The aid package, described by Finance Minister Christian Lindner as a “financial shock absorber”, is similar but on a smaller scale to the one launched in Berlin to support companies affected by the 2020 coronavirus pandemic. German companies have warned of dire consequences if the war in Ukraine leads to a cut-off of energy supplies from Russia. Some automakers and steelmakers have already been forced to shut down due to rising energy costs and shortages of spare parts made in Ukraine. The support plan, announced by Lindner and Economy Secretary Robert Habeck on Friday, will provide “a time-limited and narrowly defined cost subsidy” for companies whose electricity costs have at least doubled since last year. Ministers said Berlin also plans to raise funds directly to companies through shares or hybrid investments, first through KfW and then through a separate fund. They did not say how much he could invest. “We will alleviate the difficulties and prevent structural breakdowns,” Lindner said, adding that the plan was “precisely targeted” to avoid discouraging the transition from fossil fuels. The new € 100 billion loan facility to KfW will provide some relief to German utilities, which warn that energy markets could be pressured by higher insurance costs against higher prices through financial derivatives markets. A team representing Europe’s largest energy traders – including Shell and BP and major German utilities – made an unsuccessful appeal to central banks last month for help with extra “margin calls” needed to cover their exposure. higher energy prices.

Uniper, the German utility company, had to raise an additional 10 billion euros in funding this year, partly from KfW, to avoid a cash crisis following rising gas prices due to Russia’s invasion of Ukraine. Brussels agreed this week to ban imports of coal from Russia, which supplies 70 percent of the thermal coal imported from the bloc. However, the ban will not take effect until August, due to German demand for more time to adjust to other sources. Some EU countries have pushed for sanctions to be extended to include a full embargo on Russian oil and gas imports, but Germany has resisted. German Chancellor Olaf Solz has been repeatedly asked about Berlin’s reluctance to ban Russian energy imports at a news conference in London after meeting with British Prime Minister Boris Johnson. Solz defended Berlin’s plans to replace Russian oil imports by the end of this year and to replace Russian gas imports by 2024, saying it was “impossible” for Germany and many Eastern European countries to do so immediately. “It is absolutely necessary to build the necessary infrastructure to do this,” he said, adding that “it was not so easy” because it would require the construction of new pipelines in northern Germany and the installation of gasification boats to convert liquefied natural gas. “We started doing this before the war started,” he said. “We do what we can.” Prior to the war, half of Germany’s gas and thermal coal imports came from Russia, which also supplied a third of the country’s oil imports.

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