The war in Ukraine has had tangible consequences even for German businesses, many of which are feeling the pinch from a sharp rise in energy prices. For this reason, the Federal Ministry of Finance and the Federal Ministry for Economic Affairs and Climate Action presented a comprehensive package of measures back in April for companies particularly affected by the war. This package will be implemented step by step. Following the launch of the KfW loan programme and the guarantee scheme at the end of April and the beginning of May respectively, the third instrument can now be launched. The margining financial instrument is a hedging instrument that ensures companies trading on futures exchanges with electricity, natural gas and emission allowances have access to sufficient liquidity – especially in the event of further price rises and volatility. This measure is important and necessary in order to provide collateral (margins), which are mandatory for trading in energy. The financial resources are provided in the form of credit lines from KfW. These are covered by a federal guarantee. Initial consultations are possible as of now.
Federal Minister for Economic Affairs and Climate Action says: “The war in Ukraine and the last few days, in particular, have once again made it clear that we have to free ourselves from Russian imports as quickly as possible. An accelerated energy transition is the be-all and end-all for this. We need functioning and stable energy markets for security of supply. And to ensure this, we need to help energy companies secure their liquidity. Otherwise, we risk an unstable energy supply. That is why we are creating a new instrument. Energy companies that trade natural gas, electricity and emission allowances on futures exchanges in order to manage and secure their production must provide collateral, i.e. margins. The higher the prices, the higher these margins are. This can become a liquidity problem for companies – they do not have the funds to provide this margining, even if they are well positioned overall. That’s why we support the companies with KfW loans so that the necessary collateral can also be provided in the current price environment.”
Federal Minister of Finance Christian Lindner: “When it comes to the sharply rising energy prices, we are supporting both our citizens and our businesses. With this hedging instrument, we are expanding the measures we have already taken to cushion price trends. We are assisting companies that have experienced temporary financing difficulties through no fault of their own due to the extreme movements on the energy markets.”
Stefan Wintels, Chief Executive Officer of KfW, says: “The war in Ukraine has once again made us painfully and drastically aware of the importance of the sovereignty and resilience of Germany and Europe. The energy sector plays a central role here, as the stability of the energy supply is an indispensable prerequisite for the successful transformation of the economy and society. KfW will make its contribution to maintaining energy and supply security in Germany. At the same time, we will continue to expand our commitment to the development and use of renewable energies and energy efficiency.”
More information on the financial instrument:
KfW credit lines backed by the Federal Guarantee to assist with liquidity for collateral (margins) on futures markets for electricity, natural gas and emission allowances
Who is eligible to apply?
Companies with headquarters or branches in Germany.
What is financed?
Collateral received from margining commitments for electricity, natural gas and emission allowances from futures contracts on the EEX and ICE Endex exchanges as well as over-the-counter forward transactions on these products, which are settled by the ECC and ICE Clear Europe clearing houses.
Financing is only provided for collateral from margining obligations of the company or its group companies arising from contracts
- for electricity and natural gas related to the German spot market or for physical supplies of electricity and gas largely within or to Germany; and
- for electricity, natural gas and emission allowances: to hedge against the risk of procurement, supplies, production largely within or to Germany or for compliance with the EU ETS for electricity production largely within Germany.
Speculative positions are not financed.
What are the requirements for approval?
Margining claims must have arisen due to exceptionally high increases in price and price volatility on the energy markets.
The supply security of the Federal Republic of Germany must be at risk without the granting of a loan.
Other financing is not possible for the company.
Positive result of a credit assessment and continuation forecast; the company must not be in difficulties in the sense of state aid legislation.
What conditions apply?
The interest rate is based on the EU reference rate scheme, plus a variable interest component. The interest rate is set according to creditworthiness, but in any case, a premium on the market interest rate is agreed. A commitment fee is agreed for unused portions of the credit line.
As part of the credit assessment, a counterpart contribution of the parent company or the public owners of the company is required.
The use of the credit line is subject to the waiver of bonuses by members of the executive bodies and – insofar as legally possible – the waiver of distributions of profits for the entire calendar year in which the credit line is used.
Companies that are entitled to apply have the opportunity to clarify the documents to be provided and the necessary preparations required of the company in an initial consultation. Additional checks are only possible after the application has been submitted.
Contact persons at the Federal Government’s mandatary are:
Mr Curt Distler, Tel.: 0211 981 2647, E-Mail:
Mr Bernd Papenstein, Tel.: 0211 981 2639, E-Mail:
The application for the credit line must be submitted in writing to the Federal Ministry for Economic Affairs and Climate Action (BMWK).
Start and limitation period:
A consultation can be held for the financing instrument with immediate effect.
The application process is currently being prepared and is expected to be possible at the end of June 2022. However, it is already advisable to hold a consultation and prepare the application.
Loan agreements can be signed until 31 December 2022; loan terms until 30 April 2023 are possible.