After Russia’s Gazprom shut down the Nord Stream 1 gas pipeline, worsening Europe’s energy crisis, Finland and Sweden on Sunday, September 4, announced plans to grant billions of euros in liquidity guarantees to energy companies in their nations.
Sweden intends to provide 250 billion Swedish kronor (S$32 billion) in liquidity guarantees, while Finland aims to provide 10 billion euros (S$14 billion).
In addition to covering all Nordic and Baltic countries for the next two weeks, the assurances will extend in Sweden until March of the following year, according to Swedish finance minister Mikael Damberg.
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Electricity producers might have experienced “technical bankruptcy” on Monday in the absence of government guarantees, according to Damberg.
Lower gas shipments from Russia both before and after its invasion of Ukraine in February have already driven up prices in Europe by about 400% in the last year, driving up energy prices.
Energy companies have experienced paper losses on their power futures contracts as a result of the sharp increase in electricity rates, forcing them to find the money to post additional collateral with the markets.
(With inputs from agencies)
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