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Sweden announces emergency guarantees for energy companies

PM says Sweden is facing the chance of a war winter because of a power crunch amid the Russia-Ukraine war.

Published On 3 Sep 2022

Sweden has said it could provide several hundred billion dollars in liquidity guarantees to Nordic and Baltic energy companies to avert a financial meltdown sparked by Russias Gazprom shutting the Nord Stream 1 gas pipeline.

Prime Minister Magdalena Andersson warned that Sweden was facing the chance of a war winter due to Europes energy crunch, and said the precise information on the guarantees remained to be exercised.

Talking with reporters on Saturday, Andersson said the guarantees were targeted at giving energy groups the breathing room that’s needed.

She said there is an obvious security policy agenda behind Russias actions.

Moscow has blamed sanctions imposed by the West following Russias invasion of Ukraine for impeding routine maintenance on the pipeline, however, many EU officials have accused Russia of using energy as a weapon.

Russias energy war is having serious consequences for Europe and Swedish households and companies, especially in southern Sweden that is influenced by electricity prices in Germany, which is very influenced by gas, she said.

This threatens our financial stability. If we dont act soon it might result in serious disruptions in the Nordics and Baltics, she said.

In the worst-case scenario, we’re able to belong to a financial meltdown.

The announcement came after Russia said on Friday it had been cutting off the Nord Stream gas pipeline to Germany indefinitely because of what it said were leaks in a turbine deepening Europes difficulties in securing winter fuel.

The closure is likely to result in even higher production charges for electricity companies once the market opens on Monday.

Speaking at exactly the same news conference, Finance Minister Mikael Damberg said the federal government will submit a proposal which allows it to issue credit guarantees, adding that of the countrys parliamentary parties and the speaker have been informed.

Damberg also said the Swedish decision would secure financial stability not merely in Sweden, however in the complete Nordic region.

The guarantees were likely to be in put on Monday prior to the currency markets closing and would cover all Nordic and Baltic actors next fourteen days.

Swedens parliament has been called in from its summer break to carry a vote on the governments proposal on Monday.

Sweden is experiencing its highest inflation in 30 years, and the central bank has raised rates twice this season, with an increase of steep hikes expected before yearend.

Soaring electric bills, rising interest levels and stalling economic growth have dominated campaigning prior to the general election on September 11.

On Wednesday, Damberg said the federal government likely to have $8.36bn open to help ease consumers pain of record electricity prices this season and then.

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