German cabinet agrees to gas levy for consumers from October

Germany’s cabinet has agreed to introduce a planned levy on gas consumers from October to help suppliers hit by soaring gas import prices caused by Russia’s invasion of Ukraine, the economy ministry said on Thursday.

The plan, announced last week, comes as Europe’s biggest economy tries to reduce its dependence on Russian energy. It is facing a collapse in gas supplies and soaring prices, raising fears of energy shortages and insolvencies among gas traders.Read full story

“The temporary levy is a result of the crisis caused by Russia. It is not an easy step to take, but a necessary one to guarantee heating and energy supply in private households and the economy,” said Economy Minister Robert Habeck in a statement.

The levy on consumers, to be accompanied by targeted relief, is aimed at helping importers, especially Uniper UN01.DE, Germany’s largest recipient of Russian gas, which is receiving a state bail-out. Other companies include EnBW’s EBKG.DE gas division VNG.

The levy is expected to take effect from Oct. 1 and end on April 1, 2024, said the ministry.

Its exact size will be published in mid-August, said the ministry. Habeck said last week it would be between 1.5 euro cents and 5 euro cents per kilowatt hour (Kwh), with the proceeds available to any company having to replace Russian gas.

Government and parliamentary sources have told Reuters it still has to be clarified how the levy will be applied to customers with fixed-price contracts.