The German government approved the introduction of a tax on gas consumers from October to help suppliers affected by a sharp increase in gas import prices, Reuters reports.

The plan, announced last week, comes at a time when Europe's largest economy is trying to reduce its dependence on Russian energy. Germany is facing a collapse in gas supplies and soaring prices, raising fears of energy shortages and insolvency among gas traders.

German Economy Minister Robert Habeck of course blamed Russia for this.

The consumer levy, which will be accompanied by targeted incentives, aims to help importers, especially Uniper, the largest recipient of Russian gas in Germany, which receives state aid. Other companies include EnBW VNG's gas division.

The levy is expected to come into effect on October 1 and will be valid until April 1, 2024.

Its exact size will be published in mid-August, the ministry said. Habeck said last week that the price would be between 1.5 euro cents and 5 euro cents per kilowatt-hour (kWh) and the proceeds would be available to any company that needs to replace Russian gas.

Government and parliamentary sources told Reuters it remains to be seen how the levy will apply to clients with fixed-price contracts.