Denmark ready to offer billion-kroner loan guarantee to energy firms
A cross-aisle majority in the Danish parliament supports providing security to energy companies strained by high raw material prices through a state-financed loan guarantee programme worth 100 billion kroner.
The measure was confirmed by the government and the Danish Energy Agency (Energistyrelsen) at a briefing on Thursday afternoon, at which supply strategies were presented ahead of the coming winter.
“We can today present a state guarantee of 100 billion kroner which will help to ensure stability on the electricity market. It will protect consumers and heighten supply security,” Business Minister Simon Kollerup said.
“This is a political agreement which has been ratified by a very broad majority in parliament,” Kollerup said.
High energy prices across Europe have left households facing uncertainty about costs and supplies this winter, including in Denmark.
Rocketing fuel prices can also impact electricity companies by making it difficult for them to fulfil contracts to both buy and sell electricity.
The political deal means that companies can be given a state guarantee for bank loans if they need extra capital here and now.
Such loans can cover up to 80 percent of the loan taken out by companies, while the lender must shoulder 20 percent of the risk.
The deal makes it more attractive for banks to loan money to energy firms, in term making it easier for the companies to loan money if this is needed for them to fulfil their commitments.
Energy companies will pay a fee to use the programme. The price of this is set in accordance with the bank’s assessment of the risk of the loan. Part of this fee goes to the state as payment for the risk comprised in the guarantee.
A similar scheme was recently introduced in Denmark’s Nordic neighbour Sweden.
State protection of energy providers through the supply and cost crisis is crucial, according to the Confederation of Danish Businesses (Dansk Industri, DI).
“We must not get into a situation in which the providers of our energy cannot maintain their production because of liquidity problems,” DI’s political director Emil Fannikke Kiær told news wire Ritzau in a written comment.
“Liquidity is the precondition for us being able, during a time of crisis, to invest massively in green technologies and green conversions,” he said.
In addition to the Social Democratic government, the other parties who back the agreement are the Liberals (Venstre), Socialist People’s Party (SF), Social Liberals (Radikale Venstre), Red Green Alliance (Enhedslisten), Conservatives, Denmark Democrats, Danish People’s Party and Moderates.
READ ALSO: How much will Danish energy bills go up this winter?
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The measure was confirmed by the government and the Danish Energy Agency (Energistyrelsen) at a briefing on Thursday afternoon, at which supply strategies were presented ahead of the coming winter.
“We can today present a state guarantee of 100 billion kroner which will help to ensure stability on the electricity market. It will protect consumers and heighten supply security,” Business Minister Simon Kollerup said.
“This is a political agreement which has been ratified by a very broad majority in parliament,” Kollerup said.
High energy prices across Europe have left households facing uncertainty about costs and supplies this winter, including in Denmark.
Rocketing fuel prices can also impact electricity companies by making it difficult for them to fulfil contracts to both buy and sell electricity.
The political deal means that companies can be given a state guarantee for bank loans if they need extra capital here and now.
Such loans can cover up to 80 percent of the loan taken out by companies, while the lender must shoulder 20 percent of the risk.
The deal makes it more attractive for banks to loan money to energy firms, in term making it easier for the companies to loan money if this is needed for them to fulfil their commitments.
Energy companies will pay a fee to use the programme. The price of this is set in accordance with the bank’s assessment of the risk of the loan. Part of this fee goes to the state as payment for the risk comprised in the guarantee.
A similar scheme was recently introduced in Denmark’s Nordic neighbour Sweden.
State protection of energy providers through the supply and cost crisis is crucial, according to the Confederation of Danish Businesses (Dansk Industri, DI).
“We must not get into a situation in which the providers of our energy cannot maintain their production because of liquidity problems,” DI’s political director Emil Fannikke Kiær told news wire Ritzau in a written comment.
“Liquidity is the precondition for us being able, during a time of crisis, to invest massively in green technologies and green conversions,” he said.
In addition to the Social Democratic government, the other parties who back the agreement are the Liberals (Venstre), Socialist People’s Party (SF), Social Liberals (Radikale Venstre), Red Green Alliance (Enhedslisten), Conservatives, Denmark Democrats, Danish People’s Party and Moderates.
READ ALSO: How much will Danish energy bills go up this winter?
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