Sweden and Finland to offer liquidity guarantees to energy companies


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STOCKHOLM/HELSINKI – Finland and Sweden on Sunday announced plans to offer billions of dollars in liquidity guarantees to energy companies in their countries after Russia’s Gazprom shut down the Nord Stream 1 gas pipeline, deepening Europe’s energy crisis .

Finland aims to offer 10 billion euros ($9.95 billion) and Sweden plans to offer 250 billion Swedish kronor ($23.2 billion) in liquidity guarantees.

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“The government program is a last resort financing option for companies that would otherwise be at risk of insolvency,” Finnish Prime Minister Sanna Marin told a news conference.

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The safeguards are designed to prevent skyrocketing collateral requirements from knocking down energy companies trading power on the Nasdaq Commodities exchange, an event that could in turn spill over to the financial sector, the governments said.

Falling gas flows from Russia before and after its invasion of Ukraine in February has already driven European prices up nearly 400% in the past year, sending gas costs skyrocketing. electricity.

Rapidly rising electricity prices have resulted in paper losses on energy companies’ electricity futures contracts, forcing them to find funds to post additional collateral with exchanges.

Finland’s Marin said action was needed at EU level to stabilize the functioning of the derivatives market and the energy market as a whole.

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Nasdaq clearing is a Swedish company supervised by the Swedish authorities, which is the main reason why Sweden was the first country to step in to deal with the potential crisis.

Swedish Finance Minister Mikael Damberg said on Sunday the guarantees would last until March next year in Sweden and also cover all Nordic and Baltic countries for the next two weeks only.

Without government guarantees, power producers could have ended up in “technical bankruptcy” on Monday, Damberg said. ($1 = 10.7633 Swedish crowns) ($1 = 1.0049 euros) (Reporting by Supantha Mukherjee in Stockholm and Essi Lehto in Helsinki; Editing by Terje Solsvik and Hugh Lawson)

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