UK PM Boris Johnson likely to provide financial aid to companies affected by gas price

As the price of gas soars at a record high, the Boris Johnson led UK government is planning to back energy-intensive industries financially to keep the sector on track, the BBC reported on Tuesday. According to the report, the Department for Business has demanded the Prime Minister to offer a relief package to encourage energy-intensive industries. The significant development came after Business Secretary Kwasi Kwarteng asked the government Treasury to finance the industries hit by rising energy costs. According to BBC, the proposals include loans worth hundreds of millions of pounds. Although the major industries sought quick action from the Treasury, the office of the UK PM is yet to take the final call on the proposal submitted on Sunday. 

It is worth mentioning that several European countries including, UK, and Asia has been facing an acute shortage of gas and energy. According to the media reports, the prices have risen to 250% since the beginning of this year. Since August, the prices have towered nearly 70%. Meanwhile, various companies have reportedly either soared the prices of the final goods or shut down their factories. According to the BBC, those still running the factories are either flagging concerns with the government or preparing to shut the shops if the government would not come with concrete steps. They said the rising cost of gas and electricity makes it uneconomic for them to produce their goods. However, the proposal seems to be a tough deal as Chancellor Rishi Sunak is expected to seek to curb public spending in his next Budget on October 27, BBC reported.

Nearly half of the United Kingdom's gas requirement is used to heat homes

"Ministers and officials continue to engage constructively with production companies to further understand and to help decrease the consequences of high global gas prices, Yahoo Finance quoted a spokesperson for the Department for Business, Energy and Industrial Strategy (BEIS), as saying. "Our preference is to guarantee costs are managed and supplies of energy are maintained."
Notably, last week, the UK National Grid announced a severe warning that the country is facing a bigger threat of blackouts this winter, as well as tight electricity supplies, citing the energy crisis. According to the data, nearly half of the United Kingdom's gas requirement is used to heat homes, while another portion is used to produce electricity.

What leads to the shortage of energy:

• According to BBC, the back to back COVID-19 lockdown has cut down the production as well as transportation capacity of energy-producing industries.  
• A large amount of energy got wasted in the reopening of the plants as it needs a deep cleaning.
• The UK has fewer gas storage facilities than some countries, leading to the country's export exchequer. 
• Some reports also alleged Russia behind the ongoing crisis as it is a major gas supplier. 

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