Sweden’s Prime Minister promises public subsidies during the Russian energy crisis
Sweden’s government will provide liquidity guarantees to Nordic and Baltic companies to protect financial stability amid a rise in energy prices.
A stop in Russian gas exports could threaten stability, Prime Minister Magdalena Andersson, who faces elections next Sunday, told journalists in Stockholm. The guarantees – designed to help companies struggling to meet the increasing security requirements needed to trade electricity – will amount to “hundreds of billions” of Swedish kronor, she said without elaborating.
“We expect this to be in place before the stock exchanges close on Monday, and in the first two weeks the guarantees will cover all Nordic and Baltic players,” says Andersson. “This gives breathing room for neighboring countries to get their own measures in place.”
Andersson spoke at a joint press conference with Riksbank governor Stefan Ingves, finance minister Mikael Damberg and finance chief Erik Thedeen after Russia’s Gazprom PJSC changed its plan to resume flows through its key gas pipeline indefinitely, a move European politicians condemned as an attempt to use energy as a weapon.
Skyrocketing prices in Europe are making it more expensive for utilities to buy and sell electricity because of the additional collateral required to guarantee deals in electricity markets facing unprecedented turbulence. Fortum Oyj of neighboring Finland said earlier this week that its collateral needed to trade in Nordic electricity markets rose by 1 billion euros ($1 billion) in a week to 5 billion euros, excluding the collateral provided by its German subsidiary Uniper SE.
Finland is well ahead in similar preparations, its Finance Minister Annika Saarikko said on Twitter.
The European Energy Exchange AG this week asked for more government Support for traders to underwrite their purchases and sales as billions of euros are pledged as collateral for trades, reducing liquidity and making prices even more volatile.
Sweden’s Riksdag will be called in on Monday to consider the proposals, says the legislator in a separate statement.
Andersson’s minority Social Democratic cabinet and its constellation of supporting parties could be ousted by the right-wing opposition as the rival blocs are neck-and-neck ahead of the Sept. 11 vote.
Energy policy has become a flashpoint in Sweden’s political debate, with the opposition in recent weeks announcing its own policies aimed at easing household pain and blaming the government for a power shortage in the south after some nuclear reactors were shut down a few years ago. .
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