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Germany set to attach conditions to gas price ‘brake’, sources say

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By Christian Kramer

BERLIN (Reuters) – The German government is likely to insist that companies benefiting from a planned “damper” on gas prices meet certain conditions, such as staying in the country or preserving 90% of the jobs they provide for a year, according to sources familiar with the matter. told Reuters.

Berlin last month introduced an energy aid package, including a rein in the price of petrol and a reduction in fuel sales tax to help households and small and medium-sized enterprises (SMEs).

The brake, which sets a certain price, differs from attempts to cap market prices, a measure the European Union has debated for weeks and could not agree to, in part due to opposition from the EU. Germany which says it could make it more difficult to supply.

Berlin, meanwhile, has defended its energy relief program as beneficial for all of Europe as it bolsters the region’s biggest economy.

A German expert commission tasked with drawing up plans to mitigate the impact of gas prices met from midday Friday until well after midnight and presented proposals for specific conditions to be attached to the curb, a source said. industry source and a source close to the commission, ask not to be named.

The government is expected to accept many of the commission’s proposals once finalized, the sources said.

The proposed terms to save jobs and stay in Germany follow warnings from unions and lobbies that many small and medium-sized businesses that form the backbone of German industry were considering relocating to cheaper jurisdictions.

Any company that violates the terms should refund the price difference to the government.

The Handelsblatt newspaper was the first to report these details.

The brake will apply to 80% of basic household consumption with a cap of 12 euro cents per kilowatt hour (Kwh) while market prices will apply to the rest of consumption to encourage citizens to save the gas, the two sources told Reuters.

The purchase price of gas for some 25,000 large industrial customers will be capped at 7 euro cents per Kwh for 70% of consumption, the sources added.

Private households and small businesses will benefit from the cap from March 2023 until the end of April 2024 while the measure could come into force in January for industrial customers.

In addition, the government will offer a one-time payment to gas consumers, which is expected to be paid in December and will cost the government about 12 billion euros ($11.96 billion), a bill announced on Wednesday.

The commission has yet to agree whether companies will be allowed to pay executive bonuses or dividends to shareholders while benefiting from the cap.

($1 = 1.0037 euros)

(Reporting by Christian Kraemer, Markus Wacket and Riham Alkousaa; Writing by Riham Alkousaa; Editing by Barbara Lewis)

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