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Sweden announces emergency guarantees for energy companies

Prime Minister says Sweden faces the prospect of a ‘war winter’ due to an energy crisis during the war between Russia and Ukraine.

Sweden has said it would provide several hundred billion dollars in liquidity guarantees to Nordic and Baltic energy companies to avert a financial crisis caused by Russia’s Gazprom closing the Nord Stream 1 gas pipeline.

Prime Minister Magdalena Andersson warned Sweden was facing a “winter of war” due to energy shortages in Europe, saying the exact details of the guarantees are yet to be worked out.

Andersson told reporters on Saturday that the guarantees were intended to give energy groups “the breathing room needed”.

She said there was “a clear security policy agenda behind Russia’s actions”.

Moscow has blamed the sanctions imposed by the West after Russia’s invasion of Ukraine for hampering routine pipeline maintenance, but some European Union officials have accused Russia of using energy as a weapon.

“Russia’s energy war has serious consequences for Europe and Swedish households and businesses, especially in southern Sweden, which is dependent on electricity prices in Germany, which in turn is very dependent on gas,” she said.

“This threatens our financial stability. If we don’t act quickly, it could lead to serious disruptions in Scandinavia and the Baltic states,” she said.

“In the worst case scenario, we could end up in a financial crisis.”

The announcement came after Russia said Friday it would shut down the Nord Stream gas pipeline to Germany indefinitely due to leaks in a turbine, exacerbating Europe’s difficulties in obtaining winter fuel.

The shutdown is expected to lead to even higher production prices for electric utilities when the market opens on Monday.

At the same press conference, Finance Minister Mikael Damberg said the government will present a proposal that would allow it to issue credit guarantees, adding that all of the country’s parliamentary parties and the speaker were aware.

Damberg also said the Swedish decision would ensure “financial stability not only in Sweden, but throughout the Nordic region”.

The guarantees were expected to come into effect on Monday before the stock market closes and cover all Scandinavian and Baltic players within the next two weeks.

The Swedish parliament has been called on from the summer holidays to vote on the government proposal on Monday.

Sweden is experiencing its highest inflation in 30 years and the central bank has raised interest rates twice this year, with more steep increases expected before the end of the year.

Rising electricity bills, rising interest rates and stagnant economic growth have dominated the campaign ahead of the September 11 general election.

On Wednesday, Damberg said the government expects to have $8.36 billion available to ease the pain of record electricity prices this year and next.

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