Germany poised to take control of struggling utility Uniper

The German government is poised to nationalise struggling utility Uniper, which has been brought to the brink of insolvency by the fallout from Russia’s invasion of Ukraine.

Once Europe’s biggest importer of Russian gas, Uniper has suffered as Moscow cut supplies of natural gas to Europe, forcing it to buy more expensive gas on the spot market in order to meet its supply contracts.

Uniper said on Tuesday it was in final discussions with Berlin about a new rescue package, in which the German government would provide a further €8bn of capital and acquire the 56 per cent of its shares currently held by the Finnish energy company Fortum.

“As a result, it is envisaged that the federal government will obtain a significant majority stake in Uniper,” the company said.

Germany already owns a 30 per cent stake, which it acquired in July as part of an initial €15bn rescue package. Chancellor Olaf Scholz said at the time that Uniper was of “paramount importance” to the country’s economy and for safeguarding energy supplies to companies and consumers. The utility requested more support in August, raising the bill for its bailout to €19bn.

Fortum confirmed that negotiations over a sale of its shares to the German government were in “the final stages” and included the return to Fortum of the financing it had already provided to Uniper, previously estimated at about €8bn.

However, both companies said a final agreement had yet to be reached.

Uniper reported a €12.3bn first-half loss this year, among the largest of any German company in history.

German officials have been working to avoid a collapse of the utility, fearing it could trigger a wave of insolvencies across the sector.

VNG, one of Germany’s biggest importers of natural gas, in September requested a bailout from the government, saying it had been forced to absorb heavy losses caused by reduced deliveries from Russia’s Gazprom.

The government this month pledged €67bn in loan guarantees and liquidity assistance for energy companies, money that had originally been set aside for companies struggling to survive Covid-19 lockdowns.

Other European governments are also under pressure to bail out energy companies. Switzerland’s largest renewable electricity producer has secured state-backed credit lines while Finland and Sweden unveiled €33bn in liquidity support to electricity producers.

Fortum, majority owned by the Finnish state, this month agreed to a €2.35bn liquidity facility with a state-owned holding company.

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