Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Britain may give state loans to energy companies as gas prices surge

SportSep 21, 2021 17:11
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: Newly appointed Britain's Minister of State at the Department for Business, Energy and Industrial Strategy, Kwasi Kwarteng, is seen outside Downing Street in London, Britain July 25, 2019. REUTERS/Henry Nicholls/File Photo

By Guy Faulconbridge and Kate Holton

LONDON (Reuters) -Britain is considering offering state loans to energy companies that take on customers from firms which go bust due to soaring wholesale natural gas prices, Business Secretary Kwasi Kwarteng said on Tuesday.

As economies reopen after COVID-19 lockdowns, wholesale natural gas prices in Europe have soared this year, pushed up by high demand for liquefied natural gas in Asia, nuclear maintenance and lower-than-usual supplies from Russia.

The record prices have strained the British energy sector, destroying the business model of smaller energy traders and sending shockwaves through the chemical and fertiliser markets, leading to a shortage of carbon dioxide.

Britain's biggest energy companies have asked the government for support to help cover the cost of taking on customers from firms that have gone bust.

Asked by Sky News if state-backed loans were an option, Kwarteng said: "There are lots of options."

"It costs a company to absorb up to hundreds of thousands of customers from another company that's failed, that costs money, and there may well be a provision for some sort of loan and that's been discussed," he added.

Kwarteng said that in an average year about 5-8 smaller energy companies exited the market in Britain, but that this year the number could be bigger.

"We have to have a much more robust supply of last-resort capability," Kwarteng said, adding that customers should be able to get supply at a tariff similar to the one offered by a company that goes bust.

One source at a large energy firm involved in the talks said if a company with many hundreds of thousands of customers went bust it would be extremely difficult for another supplier to take them on.

"We could be looking at a loss of nearly 500 pounds per customer. How could we take that on if the only government support is a loan that we would need to pay back," he said speaking on condition of anonymity because of the sensitivity of the issue.


European consumers are facing the prospect of soaring winter heating bills due to a confluence of global factors that have raised questions about how vulnerable Europe remains to swings in global energy prices.

Benchmark European gas prices have risen by more than 250% since January, with contributory factors also including low storage stocks, high EU carbon prices and low renewable energy output.

Britain privatised British Gas in 1986 and, after a series of deregulating steps since then, the consumer market has seen a plethora of different companies - some essentially just traders - offering gas and electricity to households.

"I don't think we should be throwing taxpayers' money at companies which have been, let's face it, badly run," Kwarteng said. "A number of these companies have been badly run."

"I don't want there to be a reward for failure."

Kwarteng said he also hoped to have some resolution to a shortage of carbon dioxide, which is used to put the fizz in beer and soft drinks, and also used to stun pigs and poultry in abattoirs as well as to preserve the shelf-life of meat.

"Its pretty imminent but I'm confident, this week I hope we have a very clear plan to get CO2 production going again," he said, adding that he had spoken to finance minister Rishi Sunak about the situation.

A U.S. company that provides 60% of Britain's carbon dioxide, CF Industries, has halted its operations at two UK plants that produce CO2 as a byproduct of its main business, fertiliser. Kwarteng met Tony Will, the head of CF, on Sunday.

Britain said it could also look at providing some kind of economic support for the company, Kwarteng said.

Asked by Times Radio if any solution would involve the government giving financial support to get the system working again, Kwarteng replied: "It may do but there are other options on the table. We need to look at other sources of CO2 supply."

Britain may give state loans to energy companies as gas prices surge

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email