“It is clear that even in such an uncertain situation, where we do not know whether companies will come to the government’s loan desk, it is very unlikely that we will prepare to grant a loan of 10 billion euros.” Teppo Koivistofinancial director of the Ministry of Finance, was quoted saying from YLE.
However, if the demand for loans exceeds expectations, the government’s debt may increase by up to 18.9 billion euros in 2022.
the Treasury minister Annika Saarikko (The Center) stated that funding should not be misinterpreted as financial support or assistance.
“It’s a loan,” he insisted. “Companies have to pay it back in two years. And the government would lose money only in the extreme situation that the company becomes permanently insolvent. Even then, as in a regular loan, a corresponding share of the company’s collateral โ such as power plants or electricity production [loan] the value would end up being owned by the state.”
With the help of the emergency financing system, the state can grant loans and guarantees to companies with an electricity production capacity of more than 100 megawatts, which have used all other financing options considered critical for the functioning of the electricity market and which are at risk of becoming insolvent. due to increased collateral requirements.
The terms of the funding are very strict to ensure that it is only used as a last resort.
They are granted on a case-by-case basis with the permission of the Ministry of Economy and Labour. The Ministry of Finance also has the right to commission an external report on the risks associated with each loan.
A loan cannot be granted to a company that has or has had financial difficulties.
The financing is available until the end of next year with a maximum repayment period of two years and a total interest rate of 10 percent for the first six months and 12 percent interest for the rest of the repayment period. According to Helsingin Sanomat.
The borrower, on the other hand, is prohibited from distributing dividends or otherwise distributing its profits until the loan is repaid. The provision of bonuses, salary increases and other incentives to the management is accordingly prohibited in 2022-2023. The borrower must also ask the state to take a one percent ownership stake with a free share issue or agree to an increase of three percentage points. in interest.
“The loan conditions are exceptionally strict”, confirmed Saarikko. “It is a message from the government to companies that this is the last form of help. First, you should turn to the owners, such as public sector municipalities and market-based financing solutions.
The government introduced an emergency financing system due to the increase in collateral requirements of energy companies operating in the electricity derivatives market. Customers can demand collateral as a guarantee of their future electricity supply, because their value is equal to the difference between the price specified in the futures contract and the current price.
Energy prices have skyrocketed as a result of Russia’s attack on Ukraine.
The Ministry of Labor and Economic Affairs has estimated that Finnish energy companies have around five billion euros of liquid funds tied up in collateral. Most of the total amount is Fortum’s share.
With Russia announcing the shutdown of gas supplies through Nord Stream 1 for the time being, the crisis is expected to escalate. Dmitry PeskovKremlin spokesman on Monday declared that the full resumption of supplies is “undoubtedly” dependent on the lifting of sanctions against Russia.
Aleksi Teivainen โ HT