Tag Archives: REPI:GOVERNANCE

World

India hikes spending, shuns ‘outright populism’ in last pre-election budget

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  • Capex to rise 33% to 10 trillion rupees in 2023/24
  • Govt targets gross borrowing of 15.43 trillion rupees
  • Eyes fiscal deficit of 5.9% in 2023/24, 4.5% by 2025/26

NEW DELHI, Feb 1 (Reuters) – India announced on Wednesday one of its biggest ever increases in capital spending for the next fiscal year to create jobs but targeted a narrower fiscal deficit in its last full budget ahead of a parliamentary election due in 2024.

Prime Minister Narendra Modi’s party has been under pressure to create jobs in the populous country where many have struggled to find employment, although the economy is now one of the world’s fastest-growing.

“After a subdued period of the pandemic, private investments are growing again,” Finance Minister Nirmala Sitharaman said as she presented the 2023/24 budget in parliament.

“The budget makes the need once again to ramp up the virtuous cycle of investment and job creation. Capital investment is being increased steeply for the third year in a row by 33% to 10 trillion rupees.”

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The capital spending increase to about $122.3 billion, which would amount to 3.3% of gross domestic product (GDP), will be the biggest such jump after an increase of more than 37% between 2020/21 and 2021/22.

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Total spending will rise 7.5% to 45.03 trillion rupees ($549.51 billion) in the next fiscal year starting on April 1.

Sitharaman said the government would target a fiscal deficit of 5.9% of GDP for 2023/24 compared with 6.4% for the current fiscal year and slightly lower than a Reuters poll of 6%. The aim is to lower the deficit to 4.5% by 2025/26.

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STEADY ‘MACRO BOAT’

Brokerage Nomura said the budget “prudently pushes for growth, without rocking the macro boat”.

“In the event, the government has presented a good budget. It has pushed for growth via public capex and continued on the path towards fiscal consolidation, without offering much in terms of outright populism.”

Capital Economics said the “absence of a fiscal blowout”, a recent drop in inflation and signs of moderating growth could convince India’s central bank to slow the pace of rate hikes next week.

It said there was still a chance of fiscal slippage as campaigning kicks off for the election, in which Modi is widely projected to win a third straight term.

The finance ministry’s annual Economic Survey, released on Tuesday, forecast the economy could grow 6% to 6.8% next fiscal year, down from 7% projected for the current year, while warning about the impact of cooling global demand on exports.

Sitharaman said India’s economy was “on the right track, and despite a time of challenges, heading towards a bright future”.

India’s real GDP is forecast to grow in the range of 6-6.8% in FY24

Her deficit plan will be aided by a 28% cut in subsidies on food, fertiliser and petroleum for the next fiscal year at 3.75 trillion rupees. The government cut spending on a key rural jobs guarantee programme to 600 billion rupees – the smallest in more than five years – from 894 billion rupees for this fiscal year.

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The government’s gross market borrowing is estimated to rise about 9% to 15.43 trillion rupees next fiscal year.

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CONSTRAINTS

Moody’s Investors Service said the narrower fiscal deficit projection pointed to the government’s commitment to longer-term fiscal sustainability, but that a “high debt burden and weak debt affordability remain key constraints that offset India’s fundamental strengths”.

Among other moves to stimulate consumption, the surcharge on annual income above 50 million rupees was cut to 25% from 37%.

Indian shares reversed earlier gains to close lower on Wednesday, led by a fall in insurance companies after the budget proposed to limit tax exemptions for insurance proceeds, while Adani Group shares tumbled again as it struggles to repel concerns raised by a U.S. short seller.

Since taking office in 2014, Modi has ramped up capital spending including on roads and energy, while wooing investors through lower tax rates and labour reforms, and offering subsidies to poor households to clinch their political support.

A lack of jobs for young people, and meagre wages for those who do find work, has been one of the main criticisms of Modi.

Sitharaman also said the government was allocating 350 billion rupees for energy transition, as Modi focuses on green hydrogen and other cleaner fuels to meet India’s climate goals.

($1 = 81.7725 Indian rupees)

Reporting by Shubham Batra, Nikunj Ohri, Shivangi Acharya, Sarita Singh, Nigam Prusty, Manoj Kumar, Rupam Jain and Indian bureaux; Writing by Krishna N. Das; Editing by Kim Coghill, Jacqueline Wong and Gareth Jones

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World

Pakistan begins restoring power after second major grid breakdown in months

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ISLAMABAD, Jan 23 (Reuters) – Pakistan’s government began restoring power to millions of people on Monday after a breakdown in the grid triggered the worst electricity outage in months and highlighted the weak infrastructure of the heavily indebted nation.

An inquiry has been launched into the outage, which began at around 7:00 a.m. local time (0200 GMT) and has so far lasted more than 12 hours during the peak winter season.

As evening drew on and homes were without electricity in the dark, Energy Minister Khurram Dastgir wrote on Twitter that authorities had started restoring power across the country.

Dastgir had told reporters earlier: “We have faced some hurdles but we will overcome these hurdles, and will restore the power.”

The outage, which the minister had said was due to a voltage surge, is the second major grid failure in three months, and adds to the blackouts that Pakistan’s nearly 220 million people suffer on an almost-daily basis.

Power was beginning to return in parts of the capital Islamabad and the southwest province of Balochistan, said Dastgir.

Pakistan’s largest city and economic hub Karachi is likely to see electricity restored in the next three to four hours, a spokesperson for K-Electric Ltd (KELE.PSX), the southern city’s power provider, said.

[1/5] A man sits outside his shop during a country-wide power breakdown in Karachi, Pakistan January 23, 2023. REUTERS/Akhtar Soomro

Analysts and officials blame the power problems on an ageing electricity network, which like much of the national infrastructure, desperately needs an upgrade that the government says it can ill afford.

The International Monetary Fund has bailed out Pakistan five times in the last two decades. Its latest bailout tranche, however, is stuck due to differences with the government over a programme review that should have been completed in November.

Pakistan has enough installed power capacity to meet demand, but it lacks resources to run its oil-and-gas powered plants. The sector is so heavily in debt that it cannot afford to invest in infrastructure and power lines. China has invested in its power sector as part of a $60 billion infrastructure scheme that feeds into Beijing’s “Belt and Road” initiative.

“We have been adding capacity, but we have been doing so without improving transmission infrastructure,” said Fahad Rauf, head of research at Karachi brokerage Ismail Iqbal Industries.

The outage occurred on a winter’s day where temperatures are forecast to fall to around 4 degrees Celsius (39°F) in Islamabad and 8 degrees Celsius (46°F) in Karachi.

Many people also have no running water due to a lack of power for the pumps.

Earlier, Dastgir told Reuters the grid should be fully functioning by 10:00 p.m. (1700 GMT).

The outage hit Internet and mobile phone services. Several companies and hospitals said they had switched to back-up generators, but disruptions continued across the board.

Reporting by Asif Shahazad, Ariba Shahid and Gibran Naiyyar Peshimam, additional reporting by Jibran Ahmad in Peshawar and Mubasher Bukhari in Lahore and Charlotte Greenfield in Kabul; writing by Shilpa Jamkhandikar, Miral Fahmy and Shivam Patel; editing by Sudipto Ganguly, Simon Cameron-Moore and Bernadette Baum

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World

UK’s National Grid to pay people to use less power amid cold snap

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LONDON, Jan 23 (Reuters) – Britain’s National Grid (NG.L) said it would pay customers to use less power on Monday evening and that it had asked for three coal-powered generators to be warmed up in case they are needed as the country faces a snap of cold weather.

The group said that it would activate a new scheme called the Demand Flexibility Service where customers get incentives if they agree to use less power during crunch periods.

The service, which has been trialled but not run in a live situation before, would run from 5 p.m. to 6 p.m. on Monday, it said, adding that the move did not mean electricity supplies were at risk and advised people not to worry.

The measures were announced in order to “ensure that everyone gets the electricity they need,” Craig Dyke, Head of National Control at National Grid ESO, told BBC Radio on Monday, adding that 26 suppliers had signed up for the scheme.

[1/2] A British government advert offering people help with winter energy bills is seen on the side of a bus in Stockport, Britain, November 16, 2022. REUTERS/Phil Noble

Below freezing temperatures have been recorded across much of the UK in recent days with the national weather service, the Met Office, last week issuing severe weather warnings for snow and ice.

National Grid’s Dyke said consumers could make small changes to make money by reducing their energy usage, such as delaying cooking or putting on the washing machine until after 6 p.m.

National Grid said in December that over a million British households had signed up to the scheme, which is one of its strategies to help prevent power cuts.

The announcement about the coal-powered generators did not mean they would definitely be used, it said in a separate statement.

Coal-powered generators were last put on stand-by in December when temperatures dropped and demand for energy rose, but they were not needed on that occasion.

Reporting by William Schomberg and Muvija M in London, and Sneha Bhowmik in Bengaluru; editing by Tomasz Janowski, Andrew Heavens, Kirsten Donovan

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US

Kansas residents hold their noses as crews mop up massive U.S. oil spill

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WASHINGTON, Kan., Dec 10 (Reuters) – Residents near the site of the worst U.S. oil pipeline leak in a decade took the commotion and smell in stride as cleanup crews labored in near-freezing temperatures, and investigators searched for clues to what caused the spill.

A heavy odor of oil hung in the air as tractor trailers ferried generators, lighting and ground mats to a muddy site on the outskirts of this farming community, where a breach in the Keystone pipeline discovered on Wednesday spewed 14,000 barrels of oil.

Pipeline operator TC Energy (TRP.TO) said on Friday it was evaluating plans to restart the line, which carries 622,000 barrels per day of Canadian oil to U.S. refineries and export hubs.

“We could smell it first thing in the morning; it was bad,” said Washington resident Dana Cecrle, 56. He shrugged off the disruption: “Stuff breaks. Pipelines break, oil trains derail.”

TC Energy did not provide details of the breach or say when a restart on the broken segment could begin. Officials are scheduled on Monday to receive a briefing on the pipeline breach and cleanup, said Washington County’s emergency preparedness coordinator, Randy Hubbard, on Saturday.

OIL FLOWS TO CREEK

Environmental specialists from as far away as Mississippi were helping with the cleanup and federal investigators combed the site to determine what caused the 36-inch (91-cm) pipeline to break.

Washington County, a rural area of about 5,500 people, is about 200 miles (322 km) northwest of Kansas City.

The spill has not threatened the water supply or forced residents to evacuate. Emergency workers installed booms to contain oil that flowed into a creek and that sprayed onto a hillside near a livestock pasture, said Hubbard.

TC Energy aims to restart on Saturday a pipeline segment that sends oil to Illinois, and another portion that brings oil to the major trading hub of Cushing, Oklahoma, on Dec. 20, Bloomberg News reported, citing sources. Reuters has not verified those details.

It was the third spill of several thousand barrels of crude on the 2,687-mile (4,324-km) pipeline since it opened in 2010. A previous Keystone spill had caused the pipeline to remain shut for about two weeks.

“Hell, that’s life,” said 70-year-old Carol Hollingsworth of nearby Hollenberg, Kansas, about the latest spill. “We got to have the oil.”

TC Energy had around 100 workers leading the cleanup and containment efforts, and the U.S. Environmental Protection Agency was providing oversight and monitoring, said Kellen Ashford, an EPA spokesperson.

U.S. regulator Pipeline and Hazardous Materials Administration (PHMSA) said the company shut the pipeline seven minutes after receiving a leak detection alarm.

CRUDE BOTTLENECK

A lengthy shutdown of the pipeline could lead to Canadian crude getting bottlenecked in Alberta, and drive prices at the Hardisty storage hub lower, although price reaction on Friday was muted.

Western Canada Select (WCS), the benchmark Canadian heavy grade, for December delivery last traded at a discount of $27.70 per barrel to the U.S. crude futures benchmark , according to a Calgary-based broker. On Thursday, December WCS traded as low as $33.50 under U.S. crude, before settling at around a $28.45 discount.

“The real impact could come if Keystone faces any (flow) pressure restrictions from PHMSA, even after the pipeline is allowed to resume operations,” said Ryan Saxton, head of oil data at consultants Wood Mackenzie.

Reporting by Erwin Seba in Washington, Kansas, and Nia Williams in Calgary, Alberta;
Additional reporting by Arathy Somasekhar in Houston, Rod Nickel in Winnipeg and Stephanie Kelly in New York
Editing by Gary McWilliams, Stephen Coates and Matthew Lewis

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World

Exclusive: U.S. imposes sanctions on Turkish businessman, citing links to Iran’s Quds Force

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WASHINGTON, Dec 8 (Reuters) – The Biden administration on Thursday imposed sanctions on prominent Turkish businessman Sitki Ayan and his network of companies, accusing him of acting as a facilitator for oil sales and money laundering on behalf of Iran’s Revolutionary Guard Corps.

Ayan’s companies have established international sales contracts for Iranian oil, arranged shipments and helped launder the proceeds and obscured the origin of the Iranian oil on behalf of Iran’s Quds Force, an arm of the IRGC, the Treasury said in a statement first reported by Reuters.

“Ayan has established business contracts to sell Iranian oil worth hundreds of millions of dollars to buyers,” in China, the United Arab Emirates and Europe, the statement says, adding that he then funneled the proceeds back to the Quds Force.

Ayan’s son Bahaddin Ayan, his associate Kasim Oztas and two other Turkish citizens involved in his business network are also designated, along with 26 companies including his ASB Group of Companies, a Gibraltar-based holding company and a vessel.

Ayan, the son Bahaddin and Oztas were not immediately available for comment. Ayan’s ASB Group and Turkey’s Directorate of Communications did not immediately respond to requests for comment.

The Treasury action freezes any U.S. assets of those designated and generally bars Americans from dealing with them. Those that engage in certain transactions with those designated also risk sanctions.

The U.S. measures come at a time when ties between the United States and Turkey are strained over a host of issues, including disagreement over Syria policy and Ankara’s purchase of Russian air defense systems.

Most recently, Washington has warned Turkey to refrain from carrying out a military incursion into northern Syria after Ankara said it was preparing a possible ground invasion against the Syrian Kurdish YPG militia that it views as terrorists but who make up the bulk of U.S.-backed Syrian Democratic Forces (SDF).

Washington maintains sweeping sanctions on Iran and has looked for ways to increase pressure as efforts to resurrect a 2015 nuclear deal with Tehran have stalled.

U.S. President Joe Biden had sought to negotiate the return of Iran to the nuclear deal after former President Donald Trump pulled out of the agreement in 2018.

The 2015 agreement limited Iran’s uranium enrichment activity to make it harder for Tehran to develop nuclear arms in return for lifting international sanctions. Iran denies wanting to acquire nuclear weapons.

Reporting by Humeyra Pamuk and Daphne Psaledakis; Additional reporting by Ezgi Erkoyun; Editing by Don Durfee and Howard Goller

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Business

Toyota restarts output of first EV after fixing safety issues

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TOKYO, Oct 6 (Reuters) – Toyota Motor Corp said it would restart production of its first electric vehicle, the bZ4X, on Thursday after fixing potential safety problems that had halted sales of the new battery-powered model for more than three months.

Japan’s largest automaker, a laggard in the EV market, recalled 2,700 bZ4Xs globally in June after discovering that there was a risk the car’s wheels could come loose.

Subaru Corp (7270.T), a fifth owned by Toyota, also had to recall units of the related Solterra model that it jointly developed with Toyota.

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A recall notice submitted to Japan’s transport ministry by Toyota in June said that sharp turns and sudden braking could cause a hub bolt to loosen, raising the risk of a wheel coming off the vehicle.

The automaker on Thursday said in a filing to the ministry that it would make sure hub bolts were replaced and properly tightened in new versions of the bZ4X.

In addition, Toyota said it had identified and fixed a potential problem with airbags in the car. Some airbags had been improperly installed at the factory and were at risk to fail or cause injury because of the placement of a strap inside the airbag assembly.

Toyota had not previously disclosed that problem.

2023 Toyota bZ4X all-electric SUV is displayed during the 2021 LA Auto Show in Los Angeles, California, U.S. November, 17, 2021. REUTERS/Mike Blake

Masahiko Maeda, Toyota’s chief technology officer, told a briefing the automaker only became aware of the airbag issue in the last month or two.

“We apologise again for the concern, anxiety, and inconvenience we have caused to our customers, our dealers and our stakeholders,” Maeda said.

He declined to comment on how much the recall had cost.

Toyota has faced criticism from environmental groups and investors who want the company to expand faster into battery EVs. Toyota has pushed back, saying it needs to offer car choices to suit different markets and customers.

Hybrids such as the Prius remain far more popular in Toyota’s home market. Pure battery-electric vehicles accounted for just 1% of the passenger cars sold in Japan last year, according to industry data.

The bZ4X is available for lease only in Japan – a service which will resume on Oct. 26, Maeda said. He did not specify when U.S. sales would recommence.

Only 232 units of crossover, pitched as Toyota’s answer to Tesla’s (TSLA.O) Model Y and the Volkswagen’s (VOWG_p.DE) ID.4, have been sold this year in the United States.

Last year, the Japanese automaker committed about $30 billion to develop battery electric vehicles. It expects the company’s annual sales of such cars to reach only 3.5 million vehicles by the end of the decade, about one-third of current annual sales of its gasoline-powered cars.

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Reporting by Satoshi Sugiyama and Maki Shiraki; Editing by Kevin Krolicki and Edwina Gibbs

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World

Gas from Russia’s Nord Stream 2 pipeline leaks into Baltic Sea

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BERLIN, Sept 26 (Reuters) – The Danish authorities on Monday asked ships to steer clear of a five nautical mile radius off the island of Bornholm after a gas leak overnight from the defunct Russian-owned Nord Stream 2 pipeline drained into the Baltic Sea.

The German government said it was in contact with the Danish authorities and working with local law enforcement to find out what caused pressure in the pipeline to plummet suddenly. Denmark’s energy ministry declined to comment.

The pipeline has been one of the flashpoints in an escalating energy war between Europe and Moscow since Russia’s invasion of Ukraine in February that has pummelled major Western economies and sent gas prices soaring.

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“A leak today occurred on the Nord Stream 2 pipeline in the Danish area,” said Denmark’s energy agency in a statement.

Danish maritime authorities had issued a navigation warning and established a zone around the pipeline “as it is dangerous for ship traffic”, it added.

Nord Stream 2’s operator said pressure in the pipeline, which had contained some gas sealed inside despite never becoming operational, dropped from 105 to 7 bars overnight.

The pipeline, which was intended to double the volume of gas flowing from St. Petersburg under the Baltic Sea to Germany, had just been completed and filled with 300 million cubic metres of gas when Germany cancelled it days before the invasion.

“Overnight the Nord Stream 2 landfall dispatcher registered a rapid gas pressure drop on Line A of the Nord Stream 2 natural gas pipeline,” Nord Stream 2’s operator said in a statement.

“Investigation is ongoing.”

NO CLARITY

European countries have resisted Russian calls to allow the Nord Stream 2 pipeline to operate and accused Moscow of using energy as a weapon. Russia denies doing so and blames the West for gas shortages.

“We are currently in contact with the authorities concerned in order to clarify the situation. We still have no clarity about the causes and the exact facts,” said a statement from the German economy ministry.

The Swiss-based operator, which has legally been wound up, said it had informed all relevant authorities about the leak.

Russian gas exporter Gazprom (GAZP.MM) referred questions about the incident to the Nord Stream 2 operator.

Russia has cut off gas supplies to several countries and also halted flows through the Nord Stream 1 pipeline, blaming Western sanctions for hindering operations.

President Vladimir Putin in September chided the West for keeping Nord Stream 2 shut. read more

Monday’s gas leak happened a day before the ceremonial launch of the Baltic Pipe carrying gas from Norway to Poland.

The project is a centrepiece of Warsaw’s efforts to diversify from Russian gas. Danish Prime Minister Mette Frederiksen is due to travel to Poland on Tuesday to mark the occasion.

Nord Stream 2 was widely unpopular among Danish lawmakers and the country in 2017 passed a law which allowed it to ban the project from passing through its territorial waters on security grounds.

But Nord Stream 2 later changed the original route to steer it through Denmark’s exclusive economic zone, where this veto could not be applied.

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Reporting by Thomas Escritt, Christian Kraemer, Stine Jacobsen, Terje Solsvik, Marek Strzelecki and Matthias Williams; Writing by Matthias Williams; Editing by Andrea Ricci and Mark Potter

Our Standards: The Thomson Reuters Trust Principles.

Thomas Escritt

Thomson Reuters

Berlin correspondent who has investigated anti-vaxxers and COVID treatment practices, reported on refugee camps and covered warlords’ trials in The Hague. Earlier, he covered Eastern Europe for the Financial Times. He speaks Hungarian, German, French and Dutch.

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Business

Europe races to prepare for energy crunch this winter

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  • Spain may shut energy-intensive industries at peak times
  • France prepares to send gas to Germany in October
  • Germany to sign LNG contracts in UAE
  • Berlin still working on Uniper bailout

BERLIN/LISBON, Sept 19 (Reuters) – Germany was pressing on Monday to secure liquefied natural gas contracts with Gulf producers and other European states outlined measures to conserve energy, with Russian flows running at severely reduced levels as winter approaches.

Berlin said it aimed to sign LNG contracts in the United Arab Emirates to supply terminals it is building, now that the vital Nord Stream 1 gas pipeline from Russia is shut, while Spain, France others outlined contingency planning to try to avoid power cuts. read more

“If everything goes well, savings in Germany are high and we have a bit of luck with the weather, we … have a chance at getting through the winter comfortably,” Economy Minister Robert Habeck said after a tour of a future LNG terminal in northern Germany. read more

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The sharp drop supplies from Russia, which previously supplied about 40% of the European Union’s gas needs, has left governments scrambling to find alternative energy resources and has prompted fears of possible power cuts and a recession.

Russia has blamed Western sanctions imposed on Moscow for its invasion of Ukraine for hampering pipeline deliveries. European politicians say Moscow is using energy as weapon.

Germany’s RWE (RWEG.DE) said it was “in good and constructive talks” with Qatar about LNG deliveries, before a planned visit by Chancellor Olaf Scholz to the Gulf. Ailing importer Uniper (UN01.DE) said it had not reached a deal yet.

Germany will also be able to count on gas flowing from France from around Oct. 10, the head of France’s CRE energy regulator said, following an announcement by President Emmanuel Macron that the two would help each other with energy supplies.

Although deliveries via the Nord Stream 1 have halted, Russian gas flows to Europe via Ukraine, although much reduced, have continued.

In France, CRE chief Emmanuelle Wargon said that if energy group EDF’s race to repair corrosion-hit nuclear reactors suffers delays, “exceptional” measures this winter could include localised electricity cuts. read more

“But there will be no gas cuts for households. Never,” she told franceinfo broadcaster.

‘DIFFICULT WINTER’

Across the Pyrenees, Spanish Industry Minister Reyes Maroto said obliging energy-intensive companies to close during consumption peaks was an option this winter if required.

The companies would be compensated financially, she said in an interview with Spanish news agency Europa Press, adding there was no need to impose such closures now.

And Finns were warned by national grid operator Fingrid that they should be prepared for power outages. read more

Reflecting the disruptions caused across the continent, Finnish power retailer Karhu Voima Oy said it had filed for bankruptcy due to a sharp rise in electricity prices.

Meanwhile in Germany, Habeck said Berlin will not let large gas importers like VNG become insolvent, while an economy ministry spokesperson said “focused” discussions on aid were ongoing with ailing importer Uniper (UN01.DE). read more

Pipes at the landfall facilities of the Nord Stream 1 gas pipeline are pictured in Lubmin, Germany, March 8, 2022. REUTERS/Hannibal Hanschke

The German economy is contracting already and will likely get worse over the winter months as gas consumption is cut or rationed, the country’s central bank said on Monday.

In Portugal, the government was blunt about its concerns.

“From one day to another, we may have a problem, such as not being supplied the volume of gas that is planned,” environment and energy minister Duarte Cordeiro said, adding that Portugal was working to diversify its supplies to boost energy security.

“Portugal has been preparing, like all of Europe, for what will be a difficult winter,” he said, urging the European Commission to move forward with plans for a joint EU gas purchasing platform and defining import prices. read more

NORD STREAM 1 REQUESTS

Russia, which had supplied about 40% of the European Union’s gas before its February invasion of Ukraine, has said it closed Nord Stream 1 because Western sanctions hindered operations. European politicians say that is a pretext and accuse Moscow of using energy as a weapon.

German buyers briefly reserved capacity on Monday to receive Russian gas via the Nord Stream 1 pipeline, once one of Europe’s major gas supply routes, for the first time since the line was shut three weeks ago. But they soon dropped the requests.

It was not immediately clear why buyers had submitted requests for capacity when Russia has given no indication since it shut the line that it would restart any time soon. read more

Meanwhile, Ukraine accused Russian forces of shelling near the Pivdennoukrainsk nuclear power plant in Ukraine’s southern Mykolaiv region. read more

Since its forces were driven out of Kharkiv, Russia has repeatedly fired at power plants, water infrastructure and other civilian targets in what Ukraine says is retaliation for defeats on the ground. Moscow denies deliberately targeting civilians. read more

‘GOING BACK IN TIME’

European gas storages are now 85.6% full, with stocks in Germany close to 90%, data from Gas Infrastructure Europe showed.

“Stocks are set to continue to be built further, supported by the finalisation of planned maintenance work and increasing Norwegian flows as of this week,” analysts at Energi Danmark said in a morning note.

Europe’s imports of thermal coal in 2022 could be the highest in at least four years, analysts said.

“Europe is going back in time,” Rodrigo Echeverri, head of research at Noble Resources, told a conference.

Oil prices fell by more than 2% on Monday, pressured by expectations of weaker global demand and by U.S. dollar strength ahead of a potentially large interest rate hike, though supply worries limited the decline. read more

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Reporting by Reuters bureaus; Writing by Ingrid Melander; Editing by Edmund Blair, Mark Heinrich, Hugh Lawson and David Evans

Our Standards: The Thomson Reuters Trust Principles.

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Business

Germany, EU race to fix energy crisis

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  • Germany plans to expand lending to energy firms
  • EU securities watchdog mulling EU-wide measures
  • Commission to announce broader plans on Wednesday

BERLIN/FRANKFURT, Sept 13 (Reuters) – Germany will step up lending to energy firms at risk of being crushed by soaring gas prices, it said Tuesday, as Europe readied proposals to help households and industry cope with an energy crisis.

The European Commission will on Wednesday announce targets to cut electricity consumption and a revenue cap for non-gas fuelled plants. Energy ministers will hold an emergency meeting on Sept. 30 to discuss them. read more

Separately, the EU’s securities watchdog is considering measures to help energy firms struggling to meet rocketing collateral demands. Firms were caught out by surging prices after Russia cut gas supplies to Europe to counter Western sanctions following Moscow’s invasion of Ukraine. read more

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The crisis is weighing heavily on Europe’s economy, even before winter when industrial users could face rationing if gas reserves prove inadequate. Industry sentiment in the bloc’s economic powerhouse, Germany, has tumbled.

“Of course we knew, and we know, that our solidarity with Ukraine will have consequences,” German Chancellor Olaf Scholz said on Tuesday. He urged Germans to brace for a tough winter as its energy supply shifts from Russian gas. read more

Under pressure utilities are in line for further state aid.

Germany’s finance ministry wants to boost state loans for energy firms using facilities set up to offer relief during the COVID-19 pandemic, it said. The German cabinet is expected to approve draft legislation on Wednesday. The loan guarantees could amount to 67 billion euros ($68 billion). read more

Last week, VNG, one of Germany’s biggest importers of Russian natural gas, became the latest energy firm to ask the government for aid.

Uniper (UN01.DE), the country’s largest importer of Russian gas, was bailed out in July. It is weighing legal action in Sweden to claim billions of euros in compensation from Russia’s Gazprom (GAZP.MM), Reuters reported on Tuesday. read more

RAFT OF EU PROPOSALS

Companies may also benefit from an easing of regulations.

The European Securities and Markets Authority (ESMA) is “actively considering” whether any regulatory measures are necessary to help support energy firms, a spokesperson said on Monday. read more

ESMA regulates clearing houses in the EU, which in turn set minimum levels of collateral based on risks from markets and counterparties. Public intervention in this area is rare, especially after the global financial crisis over a decade ago led to tougher margin requirements.

A draft of the European Commission’s proposals, seen by Reuters, would cap at 180 euros per megawatt hour the price at which wind, solar and nuclear plants could sell their power in the 27-nation bloc. It would also force fossil fuel firms to share excess profits. read more

Governments would be required to use the cash to help consumers and companies facing sky-high energy bills.

EU officials said, however, that plans for emergency liquidity support for power firms facing soaring collateral needs were still being drafted, and would likely be published later than Wednesday.

NO GAS PRICE CAP

Diplomats say there is broad support for a revenue cap for non-gas generators, as well as plans to impose electricity demand cuts. But countries are split over other ideas – including a gas price cap.

The EU has also backed away from an earlier plan to impose a price cap on Russian gas. Countries including Hungary and Austria had opposed that idea in case Moscow retaliated by cutting off the supplies it still sends to the EU.

Meanwhile, investor sentiment in Germany deteriorated more than expected in September as concerns over its energy supply weighed on the outlook for Europe’s largest economy. read more

“The prospect of energy shortages in winter has made expectations even more negative for large parts of the German industry,” said Achim Wambach, president of the ZEW economic research institute.

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Additional reporting by Kate Abnett in Brussels and Andreas Rinke in Berlin; Writing by Ingrid Melander;
Editing by Mark Potter, Matt Scuffham and Mark Heinrich

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Business

EU divided over capping Russian gas price amid ‘energy war’

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  • Countries resist EU proposal to cap Russian gas price
  • Broader support seen for cash aid to energy firms
  • Ministers to discuss windfall levy, electricity use cut

BRUSSELS, Sept 9 (Reuters) – European Union energy ministers were split on Friday over whether to cap Russian gas prices, as they met to work out steps to shield citizens and businesses from sky-high energy bills.

But ministers arriving for the emergency meeting indicated broad backing for moves to prevent power providers from being crushed by a liquidity crunch and several said it was urgent to decouple the price of gas from other cheaper energy sources.

Friday’s ministerial talks aim to whittle down options for further discussion, rather than reaching a final decision on ways to tackle a crisis fuelled by Russia’s invasion of Ukraine. But many said agreement and action needed to be swift.

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“We are in an energy war with Russia,” Czech Industry Minister Jozef Sikela said. “We have to send a clear signal that we would do whatever it takes to support our households, our economies.”

Energy bills, already surging as demand for gas recovered from the COVID-19 pandemic, have rocketed higher since the Ukraine war. As Russia has reduced gas deliveries to Europe following the imposition of Western sanctions, EU governments have scrambled to limit the resulting energy price shock.

An EU proposal to cap Russian gas prices has so far failed to win support from a majority of countries, with Russia threatening to completely cut off the dwindling supplies that have continued to flow if such a step is taken.

Baltic states are among those backing the idea, saying it would deprive Moscow of cash to fund military action in Ukraine.

“Russia has said if you want our gas, take down the sanctions. It is blackmail. We cannot back down, we have to be united, we have to have the political will to help Ukraine win,” Estonian Economic Affairs Minister Riina Sikkut said.

But central and eastern European states, many of them more reliant than others on Russian fuel, fear losing all their supplies, while some question whether a cap would have much impact on reducing prices when deliveries are so low.

“If price restrictions were to be imposed exclusively on Russian gas, that would evidently lead to an immediate cut-off in Russian gas supplies. It does not take a Nobel Prize to recognise that,” Hungarian Foreign Minister Peter Szijjarto said.

MARKET REFORMS

German Economy Minister Robert Habeck said EU ministers should give Brussels the green light to prepare legislation to decouple the gas price from the price consumers pay for power from other energy carriers.

The European Commission this week said it would propose a measure to claw back revenues from non-gas power generators and spend the cash on cutting consumer bills.

A draft of the Commission proposal, seen by Reuters, would cap at 200 euros ($201.74) per megawatt hour the revenues non-gas producer receive. It would apply to wind, nuclear and coal generators.

European power prices are typically set by gas plants, so the cap would aim to skim off excess profits made in recent months by non-gas producers that have lower running costs but have still been able to sell their power at soaring prices.

“The measures the Commission has recommended in taking some of those excess profits and recycling them back into the households makes sense,” Irish Environment Minister Eamon Ryan said.

But France, home to Europe’s biggest nuclear power fleet, questioned whether the same limit should be applied to all non-gas generators.

EU diplomats said governments broadly supported the EU’s proposal to offer emergency liquidity to power firms facing soaring collateral requirements, although the details of this have yet to be fleshed out.

Finland and Sweden have already offered billions of dollars in liquidity guarantees to power companies in a bid to prevent the cash squeeze from toppling firms.

The EU ministers held a minute’s silence at the start of their meeting, in memory of Britain’s Queen Elizabeth, who died on Thursday after 70 years on the throne.

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Additional reporting by Sabine Siebold, Bart Meijer, Marine Strauss, by Benjamin Mallet, Philip Blenkinsop, Gabriela Baczynska; Writing by Kate Abnett and Ingrid Melander; Editing by Edmund Blair

Our Standards: The Thomson Reuters Trust Principles.

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