Germany will nationalize the gas giant Uniper to ensure that there is a continued energy supply throughout the war situation in Ukraine.
The transaction will cost the German government €8.5 billion (£7.4 billion), giving them a 98.5% ownership stake in the business.
Germany, Europe’s top importer of Russian gas, has been particularly heavily hit due to Russia’s recent supply reductions. CEO Klaus-Dieter Maubach said Uniper would profit from the agreement as “a system-critical energy supplier.”
Prior to its invasion of Ukraine, Russia supplied over 40% of Europe’s natural gas needs; however, in reaction to Western sanctions, Moscow gradually stopped supplying the continent.
Russia shut down the Nord Stream 1 pipeline at the start of this month, ostensibly for maintenance. Later, though, the nation declared that flow would not start up again unless sanctions were lifted.
With Uniper, a corporation that handles gas, coal, and hydropower plants across Europe and is currently owned by the Finnish government-owned Fortum energy company, Germany is one of the main consumers of Russian gas.
Recently, it was compelled to replace Russian supplies with substitutes purchased on the open market, where prices have drastically risen.
According to Fortum, Uniper “cannot continue to fulfill its duty as a crucial provider of security of supply as a privately-owned firm” because of the over €8.5 billion (£7.4 billion) in gas-related losses it has racked up.
Markus Rauramo, CEO of Fortum, claims that since Russia’s invasion of Ukraine, the outlook for a portfolio with a major gas component has significantly changed.
The business case for the integrated group is weak as a result.
Over the previous 12 months, the value of Uniper’s stock, which also owns the coal-fired Ratcliffe-on-Soar power station in Nottinghamshire, has dropped by more than 90%.
As part of the agreement, the German government would purchase Fortum’s Uniper shares for €500 million (£437 million) and inject €8 billion (£7 billion) in cash into the business.
Read Also: Germany takes over Rosneft oil refineries
A government official revealed that some Russian assets will also be placed under German control, adding that the disposition of those assets was still up for discussion.
In July, the government agreed to buy a 30% stake in Uniper as part of a bailout agreement.
This month, a potential bailout plan was also discussed with VNG, a big gas provider.
Germany’s economy minister, Robert Habeck, asserted that nationalizing Uniper was “necessary” to “ensure the security of supply for Germany.”
He said that, despite the loss of Russian supplies, Germany has been able to fill its gas storage tanks to over 90% of their capacity in time for the next winter.
A 2.4 euro cent per kilowatt-hour gas surcharge is also set to go into effect on October 1 and persist until April 2024.
The customer surcharge, in Mr. Habeck’s opinion, will ensure the survival of the country’s energy suppliers. He said, “the state will… do all required to keep businesses steady on the market at all times.”
Germany decreases energy use
Beginning in September, Germany started putting a number of measures into place to cut energy use and avoid shortages in the months to come.
To save money on heating, businesses can no longer keep their doors open all day.
Additionally, lighted signage must be turned off at 10 p.m. Offices will only be able to be heated to a maximum of 19C, and most public buildings will no longer have heated lobbies and passageways.
In July, energy ministers from around Europe also agreed to cut their use of natural gas by 15%.
