The German state is going to nationalize the energy giant Unipersuffocated by Russian gas supply cuts, the German government and the Finnish owner of the company, the public group Fortum, announced on Wednesday.
The government will take over around 99% of Uniper,” the German economy ministry said in a statement.
“Uniper is a central pillar of German energy supply,” the ministry said to justify the intervention. The company supplies gas to hundreds of German municipalities.
That intervention was necessary to “guarantee our gas supply and to protect consumers from an uncontrollable situation,” Finance Minister Christian Lindner said.
The deal replaces an initial aid plan unveiled in July, under which Berlin would have taken a 30% stake in the group, Germany’s top gas importer.
berlin will buy all the shares of Fortum at a price of 1.70 euros per share, for a total of 500 million euros, according to the document.
Germany will also carry out an 8 billion euro capital increase in the company, the government said.
Letting the company go bankrupt could have caused a chain reaction that could have plunged “many other energy providers into a very difficult situation”, as they would have been affected by an increase in prices, the president told a press conference. Uniper, Klaus-Dieter Maubach.
“The Right Step”
“Under the current circumstances in the European energy market, and recognizing the seriousness of Uniper’s situation, this divestment from Uniper is the right step, not only for Uniper but also for Fortum,” said the chairman of the Finnish group, Markus Rauramo, in a statement.
Rauramo added that “the role of gas in Europe has changed since Russia attacked Ukraine, and the outlook for a gas-intensive portfolio has also changed,” making Uniper’s participation in that market unfeasible.
The company was the main client of the Russian giant Gazprom in Germany. To fulfill his contracts, he will now have to source the gas on the spot market, where prices have skyrocketed.
In total, the losses suffered amount to “8.5 billion euros,” Fortum said on Wednesday.
The situation worsened when Gazprom temporarily closed its Nord Stream 1 pipelinethe main supplier of Russian gas in Germany, at the beginning of September.
Russian gas dependency
Berlin had warned in recent months of the “effect Lehman Brothers” that a bankruptcy of Uniper would have on the energy markets.
Given Uniper’s importance, its collapse would rock the energy market and cause power shortages for its thousands of customers.
The German government also entered talks with another gas supplier, VNG, in September about a possible relief package.
The Russian invasion of Ukraine caused an earthquake in the European energy market, intensifying pressure on suppliers and raising fears of possible shortages during the winter.
Germany was particularly exposed in this situation given its high dependence on energy imports from Moscow.
Since the outbreak of the war, Berlin has struggled to divest itself of Russian gas and secure alternative supplies.
The authorities have taken over key components of the energy infrastructure that were in the hands of Russian energy companies and ordered the filling of gas deposits.