Due to the ongoing war in Ukraine, there are still price risks in the energy markets, with market players experiencing a considerable need for hedging. The Federal Ministry of Finance and the Federal Ministry for Economic and Climate Action have therefore agreed to extend its instrument to finance margins: it provides companies trading on the futures exchange for electricity, natural gas and emission allowances with access to sufficient liquidity, if necessary. The instrument will be extended until 31 December 2023. 

This financial instrument can be used to finance collateral payments (also called margins) that companies are required to make when they trade on the energy exchange and which have increased significantly since the beginning of the energy crisis.

The financial instrument is part of the first package of measures adopted in April 2022 to support market players affected by the strongly increased and volatile energy prices, and is now being extended for one year with the same access requirements and on the same terms. The financial resources are provided in the form of credit lines from KfW. These are backed up by a federal guarantee.

Parliamentary State Secretary at the Federal Minister for Economic Affairs and Climate Action Michael Kellner said:
“We need stable and functioning energy markets in order to ensure security of supply and in order to implement the energy transition. The impact of Russia’s illegal war of aggression in Ukraine on our energy markets has been greatly mitigated by our measures so far, but it continues to be felt in the current price environment. By extending the instrument to finance margins, we are creating more planning certainty: once again this year, energy companies that trade natural gas, electricity and emission allowances on the futures exchanges will be able to have their collateral payments hedged via KfW loans.” 

Parliamentary State Secretary at the Federal Ministry of Finance Dr Florian Toncar said:

“The high and fluctuating energy prices continue to be a burden on our companies. Our support does not stop at price caps. By extending the instrument to finance margins, we are also sending a clear message regarding the support for those companies that have come into temporary financing difficulties without their own fault due to collateral requirements. Also this year, German companies can rely on us not to abandon them.”
More information on the financial instrument 

Who can apply?

Companies based in or operating a subsidiary in Germany.

What is funded?

Collateral payments to satisfy margin requirements for electricity, natural gas and emission allowances from futures contracts on the EEX and ICE Endex exchanges and for over-the-counter futures transactions with these products, which are handled by the ECC and ICE Clear Europe clearing houses.
Financing will only be granted for collateral payments to satisfy margin requirements of companies or its group for contracts 
·       for electricity and natural gas linked to the German spot market and for physical supplies of electricity and gas mostly in or to Germany; and 
·       for electricity, natural gas and emission allowances in order to hedge risks associated with procurement, supply and production mostly in or to Germany and in order to comply with the EU ETS for electricity production mostly in Germany. 

Speculative items are excluded from the funding. 

What are the requirements for companies?

The margin requirements must be attributable to an extraordinary rise in price levels and price volatility on the energy markets. 
A failure by the Federal Republic of Germany to grant the loans would put security of supply at risk. 
The company has no access to any other source of financing. 
The company has successfully passed a creditworthiness test and has a positive going concern prognosis.

What conditions apply?

The interest rate is based on the EU reference rate scheme, supplemented by a variable interest rate component.  It must at least comply with the provisions of the Federal Framework for subsidised loans (BKR) 2022 regarding interest rates and credit risk margins. The interest rate is determined based on the company’s creditworthiness, with, at the very least, a surcharge on the market interest rate being agreed. For cases where parts of the credit line remain unused, a commitment fee is agreed.

As part of the creditworthiness test, an own contribution of the parent company and/or the public owner of the company is required.
One of the conditions for using the credit line is that the company’s board members give up their bonuses and – if legally possible – profit distribution is suspended for the entire calendar year for which the credit line is used. 

No legal entitlement

There is no legal entitlement to access to the credit line. The decision is made based on the financial resources available to KfW, the importance of ensuring security of supply, and the satisfactory completion of an assessment by KfW, regarding in particular aspects of compliance.

Procedure: 

Before they apply, eligible companies can take part in a consultation to gain information on the documents to be provided and the preparations the company must make. Further assessments can only be made after the application has been submitted.
The contact persons for the Federal Government’s agent are: 

Ansprechpartner beim Mandatar des Bundes sind: 

Mr Curt Distler 

0211 981 2647 

curt.distler@de.pwc.com 

Mr Bernd Papenstein 

0211 981 2639 

bernd.papenstein@de.pwc.com 

Applications for using the credit line must be submitted in writing to the Federal Ministry for Economic Affairs and Climate Action. 

Start and deadlines:
The application and granting process for the credit line is ongoing. Loan agreements must be signed by 31 December 2023, loans must be repaid by 30 April 2024.