Emergency backstops were created by the governments of Sweden andFinland to help utilities trade on power markets.
They are setting up $33 billion of loans and credit guarantees in order to prevent some power companies from going into technical default. The goal is to prevent a financial crisis from occurring.
Mika Lintila said at a news conference that the ingredients for an energy industry Lehman Brothers moment were present.
The Finance Minister of Sweden warned on Sunday that failing to act could have a domino effect on the rest of the financial market. The center of the Nordic power market is located in Sweden.
Russia has been limiting the amount of gas it gives to the European Union, which has contributed to a surge in prices. Natural-gas prices are already four times the level of a year ago, and are expected to go up even more on Monday. It is putting more pressure on industries and households.
“This winter, Russia is preparing for a decisive energy attack on all Europeans,” Ukraine’s President Volodymyr Zelenskiy said on Saturday. “It wants to weaken and intimidate the entire Europe, every state. Where Russia cannot do it by force of conventional weapons, it does so by force of energy weapons.”
Sweden is giving as much as 250 billion kronor, or $23 billion, in credit guarantees, while Finland is giving as much as 10 billion euro, or $9 billion, in loans and guarantees. The motions will be processed on Monday.
The cost of buying and selling electricity in Europe has gone up due to the high price of energy. Excluding funds posted by Uniper, Fortum's collateral rose by 5 billion euros.
The government action was welcomed by the utility, which is owned by the state of Finland.
The company said in a statement on Sunday that it was good that the governments of Sweden and Finns were trying to help the energy companies.
Fortum turned to the state of Finland for help in securing its finances until its hedged power contracts are delivered. Uniper isn't eligible for funds under theFinnish plan. A huge shortfall in deliveries of natural gas from Russia resulted in huge losses for the German company.
The European Energy Exchange wants more government support to guarantee their buying and selling as billions of euros put up as collateral for trades are making prices even more volatile.
The government said that the European Commission could impose restrictions on the program.
Entities based in other Nordic and Baltic countries can access the Swedish guarantees during the initial two weeks, but they will only be available to Swedish companies. Ahead of Sweden's election, a constellation of conservative and liberal parties are trying to oust the Social Democratic minority cabinet.
The EU is planning to enter the energy market. The bloc wants to change the way energy is priced by severing the link between gas and electricity in order to blunt Russia's weapon.
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