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German Economy Minister Seeks Aid for Companies Facing Energy Pain

·2 min read

(Bloomberg) -- German Economy Minister Robert Habeck urged lawmakers on Thursday to back a massive rescue package for companies struggling with soaring power costs, a call likely to add to tensions in the three-party government over how to shore up the energy sector.

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The Greens party member said Europe’s biggest economy should be able to stump up help for businesses in the same way it came up with a 100 billion-euro ($98 billion) special territorial defense fund earlier this year.

“We are in a situation where companies need our support, in order to protect Germany’s economic fabric, or rather to defend it,” Habeck told parliament on Thursday.

Habeck’s demand comes a day after the government unveiled the nationalization of Uniper SE, amid a growing rift within Chancellor Olaf Scholz’s coalition about how to finance rescue packages for Germany’s biggest gas supplier and other utilities suffering from soaring prices. The Greens favor new debt or higher taxes, while Finance Minister Christian Lindner, who heads the business-friendly Free Democrats, has ruled out these options.

Read more: Germany Nationalizes Gas Giant in Step to Avert Energy Collapse

A compromise could be a special fund similar to the defense package, which was created in spring in reaction to Russia’s invasion of Ukraine and which is not part of the regular budget. It would see state bank KfW give government-backed loans to energy companies.

The government could tap funds from the existing economic stabilization fund (WSF), first set up in the financial crisis of 2008 and later used in the Covid pandemic. One-third has already been used but 67 billion euros remain. The budget committee is expected to pass a modification to laws later on Thursday enabling the fund to be repurposed to secure the liquidity of German energy companies.

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