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21 Sep, 2022 08:54

Germany nationalizes gas giant

The government acquires a 98.5% stake in Uniper and plans to inject about €8 billion via a capital boost
Germany nationalizes gas giant

The German authorities have agreed to nationalise Uniper, the country’s largest natural gas importer, as part of efforts to keep the industry afloat amid the energy crunch, the company announced on Wednesday morning.

According to separate statements released by Uniper and Fortum, its Finnish parent company, Berlin will also invest €8 billion ($8 billion) via a capital increase at €1.70 per share to ensure the company's survival ahead of winter.

“Today’s agreement provides clarity on the ownership structure, allows us to continue our business and to fulfill our role as a system-critical energy supplier,” Uniper Chief Executive Officer Klaus-Dieter Maubach said in a statement. “This secures the energy supply for companies, municipal utilities, and consumers.”

Earlier this month, Uniper asked for additional government aid, due to losses arising from the utility’s efforts to substitute missing volumes of Russian gas.

The government is now expected to buy out the 56% stake owned by Fortum for €480 million as part of a €15 billion ($15 billion) rescue deal approved back in July.

“Since the stabilization package for Uniper was agreed in July, Uniper’s situation has further deteriorated rapidly and significantly; as such, new measures to resolve the situation have been agreed,” Fortum’s statement reads.

Gas flows from Russia, Germany’s largest energy supplier, have been declining in recent months amid technical issues stemming from Ukraine-related sanctions imposed on Moscow. As a result, Uniper has been forced to buy gas on the spot market at much higher prices, to make up for the shortfall. 

According to Bloomberg Intelligence, Uniper’s losses from finding alternative suppliers to Russia will likely surpass €18 billion this year. The company already reported a loss of over €12 billion in the first six months of 2022.

For more stories on economy & finance visit RT's business section

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