Cyprus Mail

More liquidity support for energy utilities under looser EU state aid rules

file photo: steam rises from the cooling towers of the coal power plant of rwe in niederaussem
Steam rises from the cooling towers of the coal power plant of RWE, one of Europe's biggest electricity and gas companies in Niederaussem, Germany

Energy companies, hit by soaring power and gas prices related to the war in Ukraine, can secure public guarantees exceeding 90% coverage from EU governments to cover margin call requirements under looser state aid rules, the European Commission said on Friday.

Energy suppliers across Europe have struggled with a liquidity problem in the face of record-high wholesale power and gas prices following Russia’s invasion of Ukraine, prompting governments to step in to help.

Utilities often sell power in advance to secure a certain price, but must maintain a “minimum margin” deposit in case of default before they supply the power. This has rocketed as energy prices jumped due mainly to Russia cutting gas supplies to Europe.

“In exceptional cases and subject to strict safeguards, member states may provide public guarantees exceeding 90% coverage, where they are provided as financial collateral to central counterparties or clearing members,” the EU executive said in a statement.

This is the second time that the EU competition enforcer has relaxed the emergency rules, which are being extended to the end of 2023.

Companies can get up to 2 million euros ($1.99 million) in state aid, a fourfold increase, the EU executive said. The cap for state support to businesses in the agriculture sector was lifted to 250,000 euros from 62,000 and for the fisheries and aquaculture sectors to 300,000 euros from 75,000 euros.

Energy-intensive companies can also get more state aid while those receiving larger amounts will have to take measures to ensure they use cleaner energy.

Companies benefiting from recapitalisation support measures will be banned from paying out dividends and bonus payments and from making acquisitions.

($1 = 1.0057 euros)

Follow the Cyprus Mail on Google News

Related Posts

Six French teenagers convicted in connection with 2020 beheading of teacher Paty

Reuters News Service

US tells UN it does not support call for Gaza ceasefire

Reuters News Service

US embassy in Baghdad attacked with rockets, no casualties

Reuters News Service

Israel sharply ramps up Gaza strikes, US alarmed (update)

Reuters News Service

Airport worker sacked after man lands in Cyprus with ‘c–t’ written on suitcase

Tom Cleaver

Hunter Biden hit with federal charges for evading tax,

Reuters News Service