Off The Wire
Europe burns cash to help businesses in deepening energy crisis
BERLIN/LONDON, Sept 21 (Reuters) - Germany nationalised gas importer Uniper (UN01.DE) on Wednesday and Britain said it would halve energy bills for businesses in response to a deepening energy crisis that has exposed Europe's reliance on Russian fuel.
Russian President Vladimir Putin added to the upward pressure on energy prices by announcing a partial military mobilisation, in the biggest escalation of the Ukraine war since Moscow's Feb. 24 invasion.
European governments had already earmarked almost 500 billion euros ($496 billion) in the last year to shield citizens and companies from soaring gas and power prices, according to research by think-tank Bruegel. read more
Uniper has been among the biggest corporate casualties, with Germany earmarking an additional 8 billion euros on Wednesday in the latest step in a 29 billion euro bailout.
France, also among the high spenders, will allocate 9.7 billion euros to take full control of utility EDF (EDF.PA).
Britain said its new plan to help businesses would cost "tens of billions of pounds."
"We have stepped in to stop businesses collapsing, protect jobs, and limit inflation," Britain's finance minister Kwasi Kwarteng said of the cap on wholesale electricity and gas costs for businesses, which is set to apply from Oct.1 read more
More than 20 British power providers have collapsed, many crumbling because a government price cap prevented them from passing on soaring prices. read more
"This is clearly not sustainable from a public finance perspective," Bruegel senior fellow Simone Tagliapietra said of Europe's overall energy crisis bill.
"Governments with more fiscal space will inevitably better manage the energy crisis by outcompeting their neighbours for limited energy resources over the winter months."
'DO EVERYTHING POSSIBLE'
German Economy Minister Robert Habeck, announcing the Uniper move and other steps to avoid energy rationing this winter, said: "The state will ... do everything possible to always keep the companies stable on the market." read more
The Uniper ationalisation gives the German government control of some assets in Russia, a government spokesperson said, adding that it was examining what to do with these.
Germany was more reliant than many others in Europe on Russian gas, mostly supplied via the Nord Stream 1 pipeline. Russia halted flows through the pipeline, blaming Western sanctions for hindering operations. European politicians call that a pretext and say Moscow is using energy as a weapon.
The German government has already put Gazprom Germania, a unit of Kremlin-controlled Gazprom, and a subsidiary of Russian oil company Rosneft (ROSN.MM) under trusteeship - a de facto nationalisation. Including Uniper's bailout, the bill amounts to about 40 billion euros.
Meanwhile, a debate is raging in Europe over whether oil companies making record profits because of the energy crisis should pay additional taxes to help consumers cope with soaring inflation.
TotalEnergies' CEO (TTEF.PA) Patrick Pouyanne said on Wednesday that the French energy group was likely to face more than 1 billion euros in additional levies if a proposed EU scheme to impose extra taxes on oil and gas companies was approved. read more
European gas prices on Wednesday hit 212 euros per megawatt hour (MWh), below this year's peak of around 343 euros but up more than 200% from a year earlier. Oil prices rose by as much 3% in early trading, but later gave up these gains. [O/R}
"The partial mobilisation (in Russia) is definitely a bullish factor as it increases the risks of a prolonged war in Ukraine," said Viktor Katona, lead crude analyst at Kpler. read more
Russia's gas flows to Europe via Ukraine were steady on Wednesday while eastbound gas flows via the Yamal-Europe pipeline to Poland from Germany were halted. read more
In the United States, Democratic and Republican senators on Tuesday proposed that President Joe Biden's administration use secondary sanctions on international banks to strengthen plans for a price cap by G7 countries on Russian oil. read more
Moscow has said it would cut all oil and gas flows to the West if such a cap was implemented.
Several countries have banned imports of Russian crude and fuel, but Moscow has managed to maintain its revenues through increased sales to Asia.
The move by U.S. lawmakers came hours before Putin ordered Russia's first mobilisation since World War Two, warning the West that if it continued what he called its "nuclear blackmail" Moscow would respond with its vast arsenal. read more
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