The German government is planning to inject about €8 billion into Uniper as part of a historic agreement to nationalise the gas giant and stave off a collapse of the country’s energy sector.
Uniper confirmed on Tuesday it is in final discussions with the government over a package that would include an €8 billion capital increase, subscribed entirely by the government. Berlin will also buy the shares of its main shareholder, Finland’s Fortum.
Uniper, the biggest German buyer of Russian gas, is at the epicentre of the crisis sparked by Moscow’s moves to cut energy flows in retaliation for war-related sanctions. The government was under pressure to act as the company’s failure could ripple through Europe’s largest economy – and also threaten fuel supplies.
Uniper shares jumped 3 per cent. Fortum shares rose 9.5 per cent before trading was halted by the exchange.
The new agreement would replace a bailout plan from July that would have seen the government take a 30 per cent stake in Uniper.
Surging gas prices and Russia’s squeeze on supplies to Europe have already prompted a series of bailouts and rescue loans. But those measures are increasingly dwarfed by the scale of the crisis, and there was a risk that systemic energy providers would collapse without more robust government support.
With Russia’s main pipeline to Germany cut off, Uniper is having to source alternative supplies from the spot market to serve its clients, which include manufacturers and local utilities. The price surge is causing the company to rack up losses of as much as €100 million a day.
The German government is also in talks about taking over at least two other companies in what could become a co-ordinated swoop.
Politically, the move will be highly sensitive for chancellor Olaf Scholz and his two coalition partners, the Greens and the liberal Free Democrats.
German economy minister Robert Habeck, a former co-leader of the Greens, might have to delay or abandon a plan to introduce a gas levy on consumers that was designed to help offset the costs of the crisis. The levy was expected to generate about €34 billion and most of the revenue would have gone to Uniper. Abandoning the measures could raise questions over financing the bailout.
Finance minister Christian Lindner, who is also FDP party leader, could be forced to abandon his plan to return to constitution debt limits next year as the government seeks to contain spill over from surging energy costs.
Finland’s government has also come under heavy pressure from opposition parties over its handling of the rescue. It now faces two motions of no-confidence filed on Tuesday, with lawmakers berating the cabinet for failed negotiations with Germany and a waste of taxpayer money.
Separately, Fortum confirmed the negotiations are in the final stages and that the elements being discussed include a sale of Fortum’s Uniper shares to the German state, return of the financing Fortum granted to Uniper as well as a planned capital injection by the German state to Uniper. – Bloomberg.
