UK might offer state loans to energy companies

The UK might offer state loans to energy companies that take on customers from companies that go bust due the increase in natural gas prices, Business Secretary Kwasi Kwarteng said on Tuesday speaking to Sky news.

As economies are ro-opened after COVID-19 lockdowns, the natural gas prices have increased in Europe pushing an increase in demand for the liquefied natural gas in Asia, as there is lower supply from Russia.

These prices have strained the British energy sector and other countries in Europe. In the case of Britain, it has destroyed a business model that allows for smaller energy traders. In return the biggest energy companies in the country are taking over customers and have asked the government for support.

"It costs a company to absorb up to hundreds of thousands of customers from another company that's failed, that costs money, and there may well be a provision for some sort of loan and that's been discussed," he said.

Kwarteng said that around 5-8 smaller energy companies exit the market in an average year, but that this year the number could be bigger.

"We have to have a much more robust supply of last-resort capability," Kwarteng said.