Third aid package of 65 billion Euros against inflation from the German government

German Chancellor Olaf Scholz, Minister of Finance and Free Democratic Party (FDP) Chairman Christian Lindner, announced the measures the government will take against the energy crisis and price increases at a joint press conference with SPD Co-Chair Saskia Esken and Green Party Co-Chair Omid Nouripour.

The German people are suffering from high energy prices, rising living costs and their future. “anxiety” Stating that he is aware of what he heard, Scholz said, “Our country is going through a difficult time. This fact needs to be expressed.” said.

Olaf Scholz emphasized that his government was also concerned about these issues (increasing living costs), and argued that this difficult situation was caused by the Russia-Ukraine war.

German Chancellor Scholz “We all feel the consequences of the Russian war. All of Europe and the whole world will feel the results.” used the phrase.

“RUSSIA VIOLATIONS OF GAS CONTRACTS”

Pointing out that the war in question also had an impact on energy supply, Scholz said, “Russia violates gas contracts and has not fulfilled supply contracts for a long time. What was valid during the Cold War is no longer valid. Putin’s Russia is no longer a reliable energy supplier. It’s part of the new reality” made its assessment.

Stating that the German government was prepared for this situation in advance, Scholz said that they continued to fill their gas tanks and run coal power plants and accelerated the establishment of LNG terminals to get through this period.

“We will not leave anyone alone” Reiterating his promise, Scholz noted that through constructive negotiations, the parties in the government agreed on the importance to be taken.

German Chancellor Scholz pointed out that there is no reason for Russia to reduce its gas shipments and said that there are no sanctions against Russian gas.

Stating that they have prepared the third package to reduce the financial burden on the public and its scope is 65 billion Euros, Scholz stated that this figure is more than the sum of the two packages announced before.

THIRD AID PACKAGE IN 10 MONTHS

In the 13-page document prepared by Germany’s coalition partners, the Social Democratic Party (SPD), the Greens and the Free Democratic Party (FDP), “a timely and proportionate solution for households and companies due to the rapidly increasing burden of high energy prices” relief is needed,” it said, adding that the total value of the package is “over 65 billion Euros”.

It is noteworthy that the package announced today is the third package prepared by the German government in 10 months against rising energy prices.

Each of their previous packages was worth over 30 billion euros. With these packages, fuel taxes were temporarily abolished by a certain amount, and a one-time payment of 300 Euros was made to each taxpayer employee in order to reduce the reflection of rising energy prices on citizens. In order to encourage public transportation, unlimited public transportation tickets were offered for 9 Euros per month in the June-September period, valid on trains, buses and subways.

The third package includes a one-time payment of 300 Euros for retirees and 200 Euros for students and trainees to help meet the rising energy bills.

In the package in question, it is envisaged to introduce a new public transport ticket, which will be the successor of the 9 Euro monthly ticket applied throughout the country in the June-September period.

In the package, it is planned to increase the child allowance by 18 euros per month for the first and second child, to reduce the electricity prices for basic consumption and to extend the existing support programs for companies until 31 December 2022.

It was also noteworthy that the last aid package of the German government came two days after the Russian energy company Gazprom announced that natural gas shipments from the Nord Stream pipeline had been halted for an indefinite period.

THE EFFECT OF THE RUSSIA-UKRAINE WAR ON ENERGY PRICES

Gas and electricity prices in Germany were rising due to the effect of the sanctions imposed on Moscow after the Russia-Ukraine War and concerns over supply of natural gas.

Germany, Europe’s largest economy, is facing a spiraling energy crisis triggered by Moscow’s decision to stop gas flow through the Nord Stream 1 gas pipeline.

The monthly forward selling price of natural gas had exceeded 300 Euros per megawatt-hour on 25 August.

The price of the electricity contract for next year’s delivery in Germany exceeded one thousand euros for the first time on 29 August due to the energy crisis, which escalated as Russia curtailed its natural gas supply.

While the increase in energy costs in the country fuels inflation upwards, it also increases the pressure on households and companies.

Annual inflation in Germany, which was 7.5 percent in July, rose again to 7.9 percent in August with the latest rise in energy and food prices, reaching the highest level since 1974.

The government plans to relax many of its core energy and environmental policies to further alleviate the energy crisis.

In the energy crisis that started with the Russia-Ukraine war, the German government is taking various measures such as bill support and savings to alleviate high natural gas and electricity bills, as well as rapidly filling gas tanks by activating coal and nuclear power plants that were planned to be closed before.

GAS EMERGENCY PLAN OF GERMANY

In Germany, which has the largest economy in Europe and the country most dependent on Russia for gas, the government “gas crisis” the second phase of the country’s 3-phase Gas Contingency Plan, in the middle of the “warning” He activated his level on June 23.

Germany’s Gas Emergency Plan consists of three levels: early warning, warning and emergency, and includes the measures to be taken in the market according to the stages.

While the early warning level is activated in the Gas Contingency Plan in case the natural gas coming from Russia is interrupted, state control is foreseen in the natural gas distribution if the next level is activated.

By the way, Ministry of Economy and Climate Protectionreported that the occupancy rate of natural gas storage facilities in Germany rose above 85 percent despite the significant decrease in the amount of gas coming from Russia.

The new regulation, introduced after the Russo-Ukrainian War, requires German gas storage facilities to be at least 85 percent full by 1 October.

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