Source: Japan considers summer energy subsidies of $3.1 billion as costs increase

Sources with direct knowledge said that the Japanese government was considering renewing its subsidies for electricity and natural gas starting in July for three months. This is because it expects to face higher energy costs due to conflict in the Middle East.

Source who refused to be named as it is a 'private matter' said that the subsidies could cover the period from July to September. The budget for the subsidy would probably reach 500 billion yen (about $3 billion).

Source: The government will tap reserves for the time being, rather than compiling an?additional budget. Prime Minister Sanae Takayichi is examining the details of proposed subsidies including the level.

The Japanese industry ministry didn't immediately respond to a comment request.

The proposed measures will target "retail electricity" and "city gas" prices between July and September. Ryosei Acazawa, the Industry Minister of Japan, said that higher LNG prices would start to be felt around June.

Japan has already increased subsidies to counter rising gasoline prices as a response to Middle East tensions. This was done by drawing from 2 trillion yen of reserves in the previous and current fiscal year.

The source stated that adding gas and electricity subsidies to the gasoline subsidies would quickly deplete the funds.

Multiple government sources have stated that Takaichi does not plan to compile a supplementary budget. This raises questions about the sustainability and funding of Takaichi if energy prices continue to rise.

The government has said that electricity prices won't rise immediately, but has also pledged to be vigilant and ready to act if necessary to maintain stable energy supplies.

(source: Reuters)