Germany set to attach conditions to gas price 'brake', sources say

Berlin presented last month an energy relief package that included a gas price freeze and a reduction in fuel sales tax. This was to assist households and small- and medium-sized businesses (SMEs) alike.

The brake, which establishes a price, is different from attempts to limit market prices. This measure has been debated by the European Union for weeks. It was not agreed upon partly because of German opposition that could make it more difficult to source supplies.

Berlin has in the meantime defended its Energy Relief package, which is beneficial to all Europeans because it supports the largest economy of the region.

The German expert committee charged with reducing the gas price impact met Friday from midnight to midday and made proposals for conditions that would attach to the brake. One industry source and one close source said they were not naming the source.

Sources said that many of the recommendations from the commission will be accepted by the government once they are finalized.

The conditions for saving jobs and staying put in Germany are warnings by unions and lobbyists. They indicate that many small and medium-sized businesses that make up the backbone of German industry were looking at moving to more affordable jurisdictions.

Companies that violate the conditions will be required to repay the difference to the government.

These details were first reported by Handelsblatt newspaper.

According to two sources, the brake will be applied to 80% households' basic consumption. It will have a limit of 12 eurocents per kilowatthour (Kwh), while market prices will be used for the rest to encourage citizens to use less gas.

Sources added that the gas procurement price for approximately 25,000 industrial customers will be limited to 7 euro cents per Kwh, representing 70% of total consumption.

The cap will be available to private households and small businesses from March 2023 through April 2024, while industrial customers could benefit in January.

A draft law that was revealed Wednesday showed that the government will also offer a one-time payment to gas consumers. This is expected to happen in December.

The commission is yet to decide whether companies will be permitted to pay bonuses to management or dividends to shareholders, while still being subject to the cap.

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