Germany is on the verge of nationalizing gas company Uniper in an attempt to seal energy supplies amid the war in Ukraine.
The contract will allow the German government to acquire a 98.5% stake in the company for €8.5 billion. Germany is the biggest importer of Russian gas in Europe. But it has been pressured explicitly because Russia has cut supplies over the past few months.
CEO Klaus-Dieter Maubach stated that the contract would aid Uniper’s role as “a system-critical energy supplier.” Ahead of Russia’s invasion of Ukraine, it supplied Europe with approximately 40% of its natural gas, and it has rebutted Western sanctions by roughly trimming off supplies.
Earlier this month, Russia stopped supplies through the Nord Stream 1 pipeline, declaring repairs were needed – however, it later stated that flow would not restart until sanctions were eased.
Uniper, which manages gas, coal, and hydro plants throughout Europe and is now helmed by Finnish state-owned energy firm Fortum, is Germany’s largest buyer of Russian gas.
Recently, it has had to change Russian supplies with substitutes from the open market, where prices have skyrocketed.
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 dropped by over 90% over the past years. Uniper also owns the coal-fired Ratcliffe-on-Soar power station in Nottinghamshire. Under the contract’s terms, the German government will purchase Fortum’s shares in Uniper for €500 million and invest €8 billion cash into the business.
Germany Acquisition of 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.