Axpo has applied to the federal government for a credit line. To date, it has not made use of it. Axpo is not alone with this request. Government support has also been given in other countries in Europe. Here is an overview of the liquidity crisis in Europe.
Axpo's credit agreement with the federal government as a precautionary measure caused many questions. Read here why Axpo made this decision. But if you take a look at the other countries in Europe, you quickly realise: this is not an isolated case. All over Europe, countries are supporting their electricity producers in this extreme situation of high electricity prices with liquidity in order to stabilise the system and ensure security of supply in Europe.
Austria's largest energy supplier, Wien Energie, also recently secured itself against rising electricity prices. On 31 August 2022, the federal government granted a security loan to the city of Vienna in the amount of two billion euros to secure the energy supply for its two million customers. The loan is subject to conditions and runs until April 2023. Although no collateral was required, the lender receives a seat on the supervisory board of Wien Energie and the electricity producer must disclose its trading transactions since 2020. In addition, the federal government imposed a reporting obligation on the expenditure of the two billion euros as well as clarification of the transactions (cf. Wien Energie). Although Wien Energie has not yet drawn any money from this loan, the company was already granted 1.4 billion by emergency decree as of July. This without conditions (cf. NZZ).
On 22 July, the German government announced that it was issuing a comprehensive support package totaling up to 15 billion euros for Uniper. Uniper is one of the largest European gas companies and the largest German importer of Russian gas. The company found itself in dire straits due to a lack of gas deliveries. In order to secure the country's energy supply, the German government promised financial support, but also demanded to be represented on the supervisory board. In addition, the government ordered restrictions on the remuneration of Uniper's board of directors and a ban on dividends. (cf. Federal Ministry of Finance) The company has already drawn 9 billion euros since July (cf. Uniper). The German state takes a stake of around 30 percent in Uniper's equity and will also introduce the gas levy on 1 October, which ends on 1 April 2024. The gas levy is available to energy companies like Uniper, which have to buy natural gas on the market at a high price due to the loss of Russian natural gas (cf. NZZ); however, the details have not yet been finalised.
Sweden and Finland
The Swedish government also took action against an impending financial crisis on 5 September and will provide the equivalent of 23 billion euros for all Nordic and Baltic energy companies (cf. Sveriges Riksdag). Finland will make 10 billion euros available to Finnish companies to cover the acute liquidity needs of companies active in power generation (cf. Valtioneuvosto Statsradet). So far, only conditions such as excess profits tax are being discussed, however, there are no measures yet (cf. Euronews). In Sweden, all companies that trade and clear electricity via Nasdaq can use the credit line. The condition is that they have a lack of liquid funds due to margin safety requirements, but are still considered economically viable in the long term. Fortum, which is majority state-owned, will receive a 2.5 billion euro bridge loan to have sufficient liquidity for security guarantees in the electricity market. In addition, Finland is offering systemically important players a place under its rescue umbrella. At 14.2 percent, the interest rate for Fortum is considerably higher than that in Switzerland. A prerequisite for the loan is that no bonuses or dividends are paid out (cf. NZZ).
Europe's largest electricity provider, Electricité de France (EdF), has been in financial difficulties for some time and had to be recapitalised with 2.5 billion euros even before the outbreak of the Ukraine war. One of the triggers was a ban on EDF raising electricity prices. At the moment, the state still owns 84 percent of the company, but it is soon to be nationalised again to 100 percent. The state will pay at least eight billion euros for this (cf. Tagesschau).
As early as June, the Czech government was working on an austerity tariff that would relieve the state of the burden on citizens and electricity producers. At that time, 2.6 billion euros were earmarked, the majority of which was intended for companies (cf. Radio CZ). On 8 July, a loan agreement for 5 billion euros was reached with the Ministry of Finance, whereby electricity producers with more than 100 megawatts of installed capacity will be supported. The companies must meet certain ratings.
In the UK, many energy suppliers are privately owned. The government is working on a financing programme for energy markets, which includes short-term financial support for wholesale companies and will be communicated in October. Certain conditions will have to be met (cf. GOV.UK). The parent company of British Gas, Centrica, is said to be in talks with banks and the government for an extension of the credit lines. At the moment, however, no money has been spoken for. According to the NZZ, Energy UK, an association representing energy companies, has called for government support.
Status 19 September 2022