Germany will reportedly tap its Covid relief fund to support domestic power companies amid the fuel supply crunch

Germany is planning to allocate €67 billion ($67 billion) to provide financial aid to domestic energy companies hit by supply shortages resulting from the sharp decrease in natural gas imports from Russia, the business daily Handelsblatt reported on Tuesday, citing sources close to the federal government.

The massive financial package is expected to help KfW, the German state-owned investment and development bank, to provide guarantees and liquidity assistance to local energy firms. The funds will reportedly be transferred from the WSF (Economic Stabilization Fund), which was created during the Covid-19 pandemic.

“In view of the price increases, forward-looking action by the federal government and KfW is required,” government sources told the media. 

Gas prices throughout the EU have surged in recent months as a result of sanctions imposed on Moscow over the conflict in Ukraine, and the reduction of Russian supplies. EU leaders had previously announced plans to reduce gas consumption by 15% from August 1 until the end of March 2023. Member states have discretion over the specific measures adopted to achieve the goal.

READ MORE: German gas giant pleads for state funding amid energy crisis

“The Federal Ministry of Economics has received various applications for liquidity bridging from companies in the gas and energy supply sector, they are currently being examined,” an internal government paper seen by Handelsblatt reads. “The volume of applications is in the low double-digit billions.”

Earlier this month, Germany’s largest gas importer, Uniper, asked for extra government aid due to financial losses from its attempts to replace Russian natural gas by buying gas on the spot market.

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