Australia to offer businesses $693 million in cheap loans to ease fuel cost pressure

By Renju Jose

SYDNEY, April 2 (Reuters) - Australia will provide up to A$1 billion ($693 million) in interest-free loans to critical businesses, including transport operators and fertiliser producers, Prime Minister Anthony Albanese said on Thursday, as they struggle with surging fuel costs.

The support package comes as the Iran war disrupts global energy supplies, driving up prices and stoking concerns about availability in a country that imports more than 80% of its fuel. Fear of shortages has provoked panic buying in some regions, despite government assurances that the market is well supplied.

"No government can promise to eliminate the pressures this crisis will impose. But we can be a buffer against the worst of it. A shock absorber, in a time of global shocks," Albanese said in a speech to the National Press Club.

The cheap loans will be offered to businesses considered essential to maintaining critical supply chains, helping them to ride out the immediate financial pressure.

Albanese said the move to provide loans underscores his centre-left Labor government's focus on easing cost-of-living pressures, a priority that will shape next month's federal budget.

"It is our government's most important budget to date, and it will be our most ambitious. It has to be. The scale of the challenge facing us and the breadth of opportunities ahead of us demands that ambition and that urgency."

The government will also soon bring forward the rollout of its A$5 billion net zero fund to accelerate investment in clean energy supply chains and expand production of low-carbon liquid fuels such as ethanol and biodiesel.

Albanese warned in a rare national address on Wednesday that the economic fallout from the war in the Middle East would persist for months, impacting both families and businesses, and cautioned that the months ahead "may not be easy".

To ease supply pressures and contain prices, Labor has already released petrol and diesel from domestic reserves, halved fuel excise, and temporarily relaxed fuel standards. In additional relief for motorists, Australian states agreed on Thursday to forgo increases in goods and services tax on fuel transactions.

($1 = 1.4438 Australian dollars)