German govt agrees additional levy on gas price to save struggling importers

Amid an unprecedented rise in natural gas prices in Germany, the government has agreed on an additional levy on natural gas to help avoid importers going bankrupt over the coming winter. “The goal is to avoid insolvencies and cuts in gas supply throughout the energy crisis caused by the Russian attack on Ukraine,” the economy and climate ministry (BMWK) said. Importers of gas had to face rapidly rising prices since the war started, a situation particularly difficult for providers with many long-term customers that are legally entitled to receiving gas at fixed rates. Due to the levy, the price per kilowatt hour (kWh) of gas for final customers will increase between 1.5 and 5 cents, once the levy is passed on by providers. The levy will remain in place “for a limited period of time” and will be supplemented by relief measures for businesses and households sliding into financial difficulties due to the energy crisis, the ministry added. Currently, it is scheduled to apply between October 2023 and April 2024.

Economy and climate minister Robert Habeck said the levy was the result of an “external shock” to the German economy, which had made itself dependent on cheap Russian gas for several years. “Gas by now has become a scarce and expensive good,” Habeck said. He added that introducing the levy “has not been an easy step to take” but was necessary to ensure a secure gas supply. He said the costs will need to be partly shouldered by gas importers, too. These cover all the additional costs for gas procurement until October and 10 percent of the total extra expenditure for existing contracts after that. The government should come up with further measures to ensure customers can cope with rising costs, Habeck said. The crisis caused by Russia’s war requires “a strong social response.”

The government in late July announced it will take a 30 percent stake in Europe’s largest Russian gas importer Uniper to save it from bankruptcy due to skyrocketing prices. At the same time, price comparison websites announced year-on-year customer costs for natural gas are set to tripple in Germany, which could pose severe financial difficulties both to many households and businesses.