Germany is close to nationalizing gas giant Uniper

Germany is close to nationalizing gas importer Uniper in the wake of an energy crisis that has left the government of Europe’s largest economy with few other options to keep its industry going.

Germany is set to buy Fortum’s 78% stake in Uniper and inject another 8 billion euros ($8 billion) into the energy group that is expected to give Berlin a more than 90% stake.

Uniper, Germany’s largest importer of Russian gas, has exhausted its cash reserves to get gas in the spot market after Russia cut flows to Germany, leading to a rescue package with Berlin agreed in July. Read more

Uniper said it is in final discussions with the government and Fortum to amend the July rescue package, which has proven insufficient given surging gas prices.

“As a result, the federal government is expected to acquire a significant majority stake in Uniper,” the company said, adding that a final agreement had not yet been concluded.

An infusion of capital from the German government will bring the total rescue package used to stabilize Uniper to at least €29 billion.

The standoff between Europe and major energy supplier Russia over the Ukraine crisis has severely affected the German energy sector. The German government had already had to put Gazprom Germania and its subsidiary of the Russian oil company Rosneft under trusteeship – a de facto nationalization.

VNG, Uniper’s smaller counterpart, which is also an importer of Russian gas, had to seek state help as well, to stay afloat. Read more

Fortum said the Uniper deal would include a “refinancing of Fortum granted to Uniper” which the Finnish group estimated at €8 billion.

For the Finnish group, the deal would end an ill-fated investment in Uniper that began in 2017 and that the German group has resisted over fears it could be broken up by its major shareholder.

Finnish Minister in charge of State-Owned Enterprises Titi Toborainen said it was too early to comment on the details of the deal before it was completed.

“We consider it important that Fortum recovers the €8 billion that it has provided Uniper, and in general, the Finnish taxpayer will not incur unreasonable expenses because of this,” she told reporters.

Sources said a final agreement on the nationalization of Uniper will be revealed on Wednesday. Read more

“We need the state as the main contributor in order to survive the gas crisis and master the energy transition in the long term,” Uniper Business Council Chairman Harald Seegatz told the Rheinische Post.

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