European energy groups turn to governments for support as cash crunch worsens

Energy companies across Europe are turning to governments to bolster their liquidity and secure supplies, as the gas crisis stoked by Russia’s war against Ukraine tests their ability to stay afloat.

Switzerland’s largest renewable electricity producer Axpo and Finnish utility Fortum both said on Tuesday they had secured big new state-backed credit lines.

Power producers across Europe are facing an acute cash crunch as sharply rising energy prices lead to ballooning collateral requirements on the futures exchanges where they hedge their supply contracts.

Centrica, owner of British Gas, is in talks with banks to secure billions of pounds in extra credit, the Financial Times reported on Monday.

Axpo said the Swiss government had extended a SFr4bn ($4.1bn) “rescue package” line of credit to help it secure the country’s energy requirements in the face of soaring prices.

“This credit line ensures that, should the situation intensify further, Axpo is in a position to cover the collateral requirements of long-term power supply contracts concluded with its customers, and continue contributing to Switzerland’s security of energy supply,” the company said in a statement.

Axpo requested the line of credit last week after it came under pressure from the surge in energy prices driven by Russia’s full-scale invasion of Ukraine.

“With the support, the Federal Council wants to prevent Axpo from running into liquidity problems, which in the worst case could jeopardise Switzerland’s energy supply,” the company said, adding that it had not yet utilised the emergency funding.