Germany is very nearly nationalizing gas organization Uniper trying to seal energy supplies in the midst of the conflict in Ukraine.
The deal stipulates that the federal government will acquire a 98.5% stake in the company for €8.5 billion. Germany is the largest importer of Russian gas in Europe. But it was clearly under pressure as Russia cut supplies in recent months.
CEO Klaus-Dieter Maubach stated that the contract would aid Uniper’s role as “a system-critical energy supplier.” Before Russia invaded Ukraine, it supplied about 40% of its natural gas to Europe, defying Western sanctions by decisively cutting supplies.
Earlier this month Russia halted supplies through the Nord Stream 1 pipeline and said repairs were needed – but later said flow would not resume until sanctions were eased.
Uniper, which controls gas, coal and hydropower plants across Europe and is now controlled by Finnish state-owned energy company Fortum, is Germany’s biggest buyer of Russian gas.
More recently, it has had to replace Russian supplies, which have skyrocketed in price, with free-market alternatives.
According to Fortum, Uniper had racked up nearly €8.5 billion in gas-related losses “and cannot continue to fulfill its role as a critical provider of security of supply as a privately-owned company.”
“The role of gas in Europe has fundamentally changed since Russia attacked Ukraine, and so has the outlook for a gas-heavy portfolio,” Forum CEO Markus Rauramo said in a statement. “As a result, the business case for an integrated group is no longer viable.”
Uniper’s share prices have fallen by over 90% in recent years. Uniper also owns the Ratcliffe-on-Soar coal-fired power plant in Nottinghamshire. Under the terms of the contract, the German government will buy Fortum’s shares in Uniper for € 500 million and invest € 8 billion in cash in the company.
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Germany Obtains Uniper
A few assets in Russia will also be obtained by Germany, according to a government spokesperson, further saying that it is yet to be determined what would be done with them.
The government had already approved acquiring a 30% stake of Uniper under a bailout agreement in July. Earlier this month, it also met with another prominent gas supplier, VNG, to talk about a potential bailout package.
Economy minister Robert Habeck stated that nationalizing Uniper was a “necessary” step that would aid to “ensure security of supply for Germany.”
He added that, although the Russian supplies had been lost, Germany had earned a milestone in filling its gas storage facilities to more than 90% capacity before winter.
“This means that, as a while, we have coped quite well with the situation,” he stated. “But for Uniper, the situation became significantly more dramatic and significantly worse.”
On October 1, a 2.4-euro cents per kilowatt hour surcharge is also scheduled to be imposed and implemented until April 2024.
Per Habeck, consumer weight would ensure the country’s energy firms stayed viable.
“The state will… do everything to keep companies stable on the market at all times,” he stated.
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Photo: Hydro News
