In Sweden, Denmark and Finland, the authorities have created loan guarantees in the hundreds of billions to help companies that end up in a cash crunch due to high electricity prices. This is to prevent default and “a new financial crisis”. Several actors are now advocating that Norway needs a similar arrangement after the electricity company Tibber reported “challenges” with liquidity last week. The money crunch caused the company to send out notices to customers that they will start collecting parts of the electricity bill in advance. Tibber CEO Edgeir Aksnes stated in that context that it was “disappointing” and “incomprehensible” that “the biggest profiteer of the entire energy crisis” (that is, Norway) did not show greater willingness to come up with similar guarantee schemes as our Nordic neighbours. Corresponding calls have come from NHO and Energi Noreg, which have called for a signal from the governing authorities that “guarantees will come when needed”. – We must stand together to avoid the energy crisis also becoming a financial crisis, said director of Energi Noreg, Toini Løvseth, to news in September. Helge Haugane in Equinor says the energy market “will dry up” unless European countries guarantee at least 1,500 billion dollars. Photo: Arne Reidar Mortensen / Equinor ASA – Here the state should know its visiting hours So far, the response from the Ministry of Finance, the Ministry of Oil and Energy, Norges Bank and the Finanstilsynet is that access to cash is “a limited problem” with Norwegian electricity companies, but that they “follow Pay close attention to developments”. The Ministry of Petroleum and Energy responds to State Secretary Andreas Bjelland Eriksen (Ap): – Our impression is that access to liquidity is a limited problem in Norway. Within the current regulations, power suppliers can use both advance and arrears invoicing of electricity consumption. We are not aware of power suppliers having problems financing themselves in the private capital market. Among economists and politicians in the Storting, there is still talk that the time has come to create government loans based on the Swedish and Danish model. This is to ensure that the company has enough cash to meet its ongoing obligations. – We primarily believe that measures must be taken to reduce electricity prices, but until then the state should take the capital risk, not the customers. They have big enough financial challenges as it is, so here the state should know its visiting time, says Marius Arion Nilsen, who is energy policy spokesperson in the Frp. The opposite message comes from SV: – I understand well that the government does not prioritize supporting private power companies with favorable loans, at a time when most things are becoming more expensive, says Lars Haltbrekken (SV). The Ministry of Finance at Vedum says “the current assessment is that the measures announced in Sweden and Finland will reduce the risk of unrest in the financial system”. Photo: Beate Oma Dahle / NTB – We should look at this type of solution in Norway news has also been in contact with several actors in the banking industry and academia. Thina Saltvedt, chief analyst for sustainable finance at Nordea: – If this is expected to be a recurring need for the electricity companies in this country, then we should look at this type of guarantee solution in Norway as well. Jan Ludvig Andreassen, chief economist in the Eika group: – It may be that we should change our model. In any case, we certainly have something to learn from our neighboring countries. Ola Honningdal Grytten, professor of economics (NHH): – The governing authorities should only offer such loan guarantee schemes when absolutely necessary, but now we may be there. So this should be considered. news has previously written that the trading of futures on the Nasdaq exchange means that Norwegian power companies must suddenly guarantee large sums of money – so-called margin requirements. The purpose of these financial agreements is to exchange risk for security and stability, but when the market makes big mistakes, the effect can be the opposite. Then the agreements become expensive and unpredictable. The trade in future electricity was the starting point for the Swedish and Finnish authorities to come up with multi-billion credits to Nordic energy companies in a short time – to prevent a domino effect of bankruptcies. Mixed signals from the power industry Per Storm-Mathisen, Hafslund Eco – Hafslund is positive about loan guarantees. Like Energi Noreg, we are confident that the Norwegian authorities will step up if necessary. Øystein Vikingsen Fauske, managing director of Wattn – We understand that companies struggling with liquidity are now in a difficult situation. And it is very unfortunate that this challenge is in turn transferred to the end customers with, for example, advance invoicing. We support the entry from Energi Norge. The state must step in to avoid bankruptcies and to ensure that invoicing routines are not introduced that affect end customers. Knut Fjerdingstad, Statkraft – We have previously said and we still believe that there is no need for a “Swedish arrangement” in Norway. Atle Simonsen, Lyse – We have more legs to stand on. This means that we have no need for this type of loan arrangement. Furthermore, it goes without saying for us that customers who already have high bills should not have to pay their electricity supplier in advance. Mona Adolfsen, business policy advisor at Samfunnsbedriftene Energi – We understand the challenging situation electricity suppliers such as Tibber are now in. We still see a solution where one goes back to advance payment as very unfortunate. This will pass the financial risk onto the customers. We also fear that when Tibber, as one of the more well-known and actually gradually recognized suppliers, starts with advance payment, then more will probably follow suit. Then we are definitely going in the wrong direction. We also do not see a solution with government loans to the electricity companies following the Swedish and Danish model as a solution. Today, the threshold for entry as a power supplier is relatively low, while the requirement that is now placed on financial strength has increased dramatically. It must lie with the companies and cannot become yet another burden placed on the governing authorities and for which the community must pay. – If this is expected to be a recurring need for the electricity company in this country, then we should also look at this type of solution, says Thina Saltvedt in Nordea. Photo: Josef Benoni Ness Tveit / news – Many people’s equity is generally too low – I can see that a company like Tibber grows so quickly that there are challenges with liquidity, but whether the governing authorities should come in with guarantees is a more difficult matter, says Frode Steen, who is professor of economics at NHH. Tibber writes in his own annual report that the equity is “lower than what the bank requires”. Photo: news Peter Warren has more than 30 years’ experience as a manager, trader and investor. He tells news that the equity capital of Norwegian power companies “is generally too low in relation to the obligations they take on”. – The electricity company needs to harmonize its equity in relation to the increase in customer volume and fluctuations. By doing this, the equity will be in proportion to the obligations they take on, he says. Corresponding analysis comes from Samfunnsbedriftene, which organizes more than a hundred Norwegian energy companies. – It is a challenge that the threshold for entry as a power supplier is relatively low, while the requirement for financial strength has increased dramatically, says Mona Adolfsen, who is a business policy adviser in the organisation. She adds: – But it is not a burden the community should expect to pay for.
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Increased pressure to help power companies in financial straits – news Vestland
