Germany to step up state bank credit for struggling energy firms

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The headquarters of Germany's Kreditanstalt ruer Wiederaufbau (credit institute for reconstruction) KfW is seen in front of Germany's federal reserve bank, Bundesbank in Frankfurt

BERLIN (Reuters) -Germany wants to boost the state loans available to struggling energy companies by drawing on credit authorisations already created for a relief fund during the COVID-19 pandemic, the Finance Ministry said on Tuesday.

Some 67 billion euros ($67.94 billion) in credit authorisations are to be transferred from the WSF economic stabilisation fund to state development bank KfW, the Handelsblatt business daily reported, citing government sources.

This will bolster KfW’s ability to provide guarantees and liquidity assistance to energy companies hit by drastic reductions in gas imports from Russia, the finance ministry said.

The German cabinet is expected to approve draft legislation for the boosted credit funds on Wednesday, which will then be put to parliament.

The ministry said the WSF’s long-term borrowing authorisation suited the current situation as it was unclear how long the country’s energy woes would last.

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

Like Uniper, which in July secured a government bailout, now totalling 19 billion euros ($19.2 billion), VNG has been hit by a sharp drop in Russian gas deliveries, forcing it to fill the gap in the spot market at much higher prices.

($1 = 0.9862 euros)

(Reporting by Christian Kraemer, Writing by Miranda Murray and Rachel More, Editing by Catherine Evans)