Coal company LEAG receives record support credit amid price crisis – media
Eastern German lignite company LEAG has accepted a loan of over five billion euros from state-owned bank KfW to cushion the impact of Russia’s war on Ukraine on energy markets, business newspaper Handelsblatt reports. “An emergency like this has never existed before on the German energy market,” the authors write, adding that the 5.5-billion-euro loan given to LEAG is the largest individual company credit ever granted by KfW. The loan was made available more than a week ago to alleviate a “critical” situation, which is now under control, the newspaper said, citing government sources. Apart from lignite power producer LEAG, energy company Uniper has also secured a loan over two billion euros, while gas retailer VNG has requested a similar support credit, they added. The companies’ financial difficulties arise from suddenly skyrocketing security deposits they have to make at a clearing house to cushion price fluctuations on energy markets. As many energy companies have entered into long-term supply contracts with customers at fixed rates, these deposits are needed to buy energy reserves on the market if the companies can no longer deliver electricity or gas themselves. In the medium run, however, energy companies like LEAG could end up benefitting from the current price explosion on energy markets, the authors write.
LEAG is Germany’s second largest lignite producer after RWE and employs about 7,000 people in eastern Germany. It is owned by Czech investment company EPH. Coal power plant operators in Germany have started making provisions for a runtime extension of decommissioned stations in preparation for possible energy supply disruptions as a result of the war in Ukraine, while the economy and climate ministry (BMWK) said all plants going offline in the future would first move into a capacity reserve before being shuttered completely.