Japan's government is considering reviving subsidies for electricity and natural gas for three months from July, a source with direct knowledge of the matter said, as it braces for higher energy costs amid conflict in the Middle East.
The subsidies would likely cover usage from July through September, with a budget that could reach about 500 billion yen, said the source, who declined to be identified as the matter is still private.
The government plans to tap reserve funds for now, instead of compiling a supplementary budget, the source said, adding that Prime Minister Sanae Takaichi has begun examining details of the proposed subsidies, including the level of support.
Japan's industry ministry did not immediately respond to a request for comment.
The planned measures would target retail electricity and city gas prices over the July-September period. Industry Minister Ryosei Akazawa has said the impact of higher prices for liquefied natural gas (LNG), widely used in thermal power generation, would likely begin emerging around June.
Japan has already extended subsidies to counter higher gasoline prices in response to Middle East tensions, drawing on 2 trillion yen in reserves from the previous and current fiscal years.
As oil prices remain elevated, adding electricity and gas subsidies on top of the gasoline subsidies could quickly dry up those funds, the source said.
Takaichi is not considering compilation of a supplementary budget at this stage, multiple government sources have said, raising questions about the sustainability of funding if energy prices remain high.
The government has so far maintained that electricity prices will not rise immediately but has pledged to remain vigilant and be prepared to act to ensure stable energy supplies.
Reuters
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