Europe supports energy companies despite liquidity crisis

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Europe supports energy companies despite liquidity crisis

  • The European Union has tasked Brussels with drafting proposals to cap revenues for non-gas energy producers and help power companies stay afloat.
  • Several European governments had already announced measures to provide loans and guarantees to cash-strapped businesses.
  • The Polish PGNiG can access up to 55 billion zlotys ($11.7 billion) in Polish state guarantees to secure liquidity funding.

More and more European energy companies have received additional funding from governments and banks, as soaring gas and electricity prices following Russia’s invasion of Ukraine have increased demand for margin call and depleted their cash reserves.

Several European governments had already announced measures to provide loans and guarantees to cash-strapped companies before the European Union on Friday tasked Brussels with drafting proposals within days to cap the revenues of non-gas energy producers and helping electric companies stay afloat.

Utilities often sell electricity in advance, but must keep a “minimum margin” deposit in case of default before supplying electricity. That deposit has risen alongside rising energy prices, leaving companies scrambling to get the cash, as many businesses face limits on additional costs that can be passed on to customers.

VNG (VNG.UL), one of Germany’s largest importers of Russian gas and a subsidiary of EnBW (EBKG.DE), has requested government assistance to continue operations and absorb accumulated losses.

The Polish PGNiG can access up to 55 billion zlotys ($11.7 billion) in Polish state guarantees to secure liquidity funding. So far, the gas company has drawn down 10 billion zlotys to obtain two loans of 4.8 billion zlotys from state-controlled banks.

The government has also set up a 10 billion zloty fund for PGNiG to compensate for the difference between gas prices on the market and those charged to residential customers – which are regulated and have been frozen by the government this year to protect buyers. by retail.

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