The European Commission has approved a 1.5 billion euro Belgian guarantee scheme to support gas and electricity suppliers in the context of Russia’s war against Ukraine. This as a result of the serious disruption the EU economy is experiencing.
Impact of the geopolitical crisis
The rise in gas and electricity prices as a result of the current geopolitical crisis and the lack of liquidity, linked among other things to late payments by end consumers, inevitably lead to increased demand for working capital by energy suppliers.
In the context of economic uncertainty as a result of the current geopolitical crisis, this 1.5 billion euro guarantee scheme allows Belgium to provide liquidity support to continue necessary operations.
The Belgian liquidity support measure
Belgium has applied for a 1.5 billion euro scheme from the European Commission to provide liquidity support to electricity and gas suppliers and their intermediaries in the context of Russia’s war against Ukraine. Who can expect support?
To be eligible, these companies must not be in financial difficulty at the time they apply for support. Guarantees are also granted by the Ministry of Energy and cover new working capital loans for up to two years.
When a supplier or intermediary defaults, it can have a serious cascading effect on the wider energy market and security of supply. Intervening in this crisis situation, by providing a state guarantee allowing beneficiaries to access the required liquidity, is therefore necessary for the stability of energy markets and for security of supply.
Regional support for high energy costs
Aid that can be rolled out as a result of the crisis experienced by European member states, among others, is being looked at various levels, including on a regional level within Belgium
For companies in Flanders and Wallonia facing rising energy prices and experiencing problems in terms of employment, production and purchasing power, the governments have each put together a support package. In Flanders, on the one hand, compensation for increased energy costs and an extension of available credits, and on the other, the launch of an impulse programme to accelerate the energy transition. In Wallonia, this ranges from direct support to companies affected by rising energy prices to loans and refunds.
Within the framework of Next Generation EU
To tackle the economic crisis caused by Covid 19 in a fair and environmentally conscious way, the European Commission will support efforts at a national level, especially in the hardest hit countries, through NEXT Generation EU. The recovery plan will raise funds by temporarily raising the own resources ceiling to 2% of the EU’s gross national income, allowing it to borrow 750 billion euro on the financial markets. Part of this will be allocated to Belgium’s recovery and resilience plan.
The Commission concluded that this Belgian scheme is in line with the terms of the Next Generation EU Temporary Crisis Framework:
On this basis, the Commission approved the aid measure under EU state aid rules.
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