Germany reaches deal to nationalise troubled gas giant Uniper

Germany reaches deal to nationalise troubled gas giant Uniper

One of the biggest importers of Russian gas, Uniper has been squeezed as Moscow has reduced supplies to the continent in the wake of its invasion of Ukraine in February
One of the biggest importers of Russian gas, Uniper has been squeezed as Moscow has reduced supplies to the continent in the wake of its invasion of Ukraine in February. Photo: LENNART PREISS / AFP/File
Source: AFP

PAY ATTENTION: Сheck out news that is picked exactly for YOU ➡️ find “Recommended for you” block on the home page and enjoy!

Germany has reached a deal to nationalise troubled gas giant Uniper, the government said Wednesday, as the energy sector reels from the fallout of Russia's war in Ukraine.

Berlin and Uniper's Finnish owner, Fortum, announced a deal that will leave Germany with a 98.5 percent stake in the debt-laden gas company.

"Uniper is a central pillar of German energy supplies," the economy ministry said in a statement.

Under the agreement, Berlin will inject eight billion euros ($8 billion) in cash in Uniper and buy Fortum's shares for 500 million euros.

Fortum will also be repaid for an eight-billion-euro loan it gave Uniper.

"Under the current circumstances in the European energy markets and recognising the severity of Uniper's situation, the divestment of Uniper is the right step to take, not only for Uniper but also for Fortum," said Fortum chief executive Markus Rauramo.

Read also

UN tackles food prices as Ukraine crisis spells disaster

PAY ATTENTION: Click “See First” under the “Following” tab to see YEN.com.gh News on your News Feed!

"The role of gas in Europe has fundamentally changed since Russia attacked Ukraine, and so has the outlook for a gas-heavy portfolio. As a result, the business case for an integrated group is no longer viable," Rauramo said in a statement.

One of the biggest importers of Russian gas, Uniper has been squeezed as Moscow has reduced supplies to the continent in the wake of its invasion of Ukraine in February.

Missing deliveries have had to be replaced with expensive supplies from the open market, where prices for gas have skyrocketed.

Fortum said Uniper has accumulated close to 8.5 billion euros in gas-related losses "and cannot continue to fulfil its role as a critical provider of security of supply as a privately-owned company".

Germany's Russian gas dependence

Read also

Dutch unveil 17-bn-euro package for hard-hit households

The German state had already agreed in July to take a 30 percent stake in Uniper as part of an initial bailout agreement.

But Uniper announced earlier this month that the two sides were exploring a possible nationalisation as the energy crisis showed no signs of abating.

Fortum provided an eight-billion-euro loan to Uniper in January as the price of gas had already begun to climb amid tensions with Moscow before the invasion of Ukraine.

The Finnish company held a near-80-percent stake in Uniper, which would have been cut to around 56 percent under the July bailout plan.

Earlier in September, the German government entered into discussions with another gas supplier, VNG, over a possible bailout package.

Russia's war in Ukraine has triggered an earthquake on European energy markets, cranked up the pressure on suppliers and raised fears of possible shortages over the winter.

Germany has found itself particularly exposed due to its previous heavy reliance on Russian energy imports.

Read also

Germany in 'final discussions' over Uniper nationalisation

Since the outbreak of the war, Berlin has worked to wean itself off Russian gas and secure alternative supplies.

Officials have seized key pieces of energy infrastructure which were in the hands of Russian energy companies and mandated gas stores to be filled.

New feature: Сheck out news that is picked for YOU ➡️ find “Recommended for you” block on the home page and enjoy!

Source: AFP

Authors:
AFP avatar

AFP AFP text, photo, graphic, audio or video material shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. AFP news material may not be stored in whole or in part in a computer or otherwise except for personal and non-commercial use. AFP will not be held liable for any delays, inaccuracies, errors or omissions in any AFP news material or in transmission or delivery of all or any part thereof or for any damages whatsoever. As a newswire service, AFP does not obtain releases from subjects, individuals, groups or entities contained in its photographs, videos, graphics or quoted in its texts. Further, no clearance is obtained from the owners of any trademarks or copyrighted materials whose marks and materials are included in AFP material. Therefore you will be solely responsible for obtaining any and all necessary releases from whatever individuals and/or entities necessary for any uses of AFP material.