FRANKFURT - Germany will nationalise Uniper in a historic move to rescue the country's largest gas importer and avert a collapse of the energy sector in Europe's biggest economy this winter.
The government in Berlin will inject €8 billion (S$11.2 billion) into the utility via a capital increase at €1.70 per share, the German Economy Ministry, Uniper and Finnish parent company Fortum Oyj said on Wednesday. Uniper has accumulated €8.5 billion in gas-related losses after Russia cut off supplies to Europe, sending prices for alternative sources soaring.
As part of the deal, expected to be completed by the year end, Germany will take control of Uniper, buying the 78 per cent owned by Fortum - which is majority owned by the Finnish government - for about €480 million. The German state will own approximately 99 per cent of Uniper.
"Today's agreement provides clarity on the ownership structure, allows us to continue our business and to fulfil our role as a system-critical energy supplier," Uniper chief executive officer Klaus-Dieter Maubach said in a statement. "This secures the energy supply for companies, municipal utilities and consumers."
Chancellor Olaf Scholz's ruling coalition is determined to ensure Uniper's survival in the coming months, when the energy crunch could worsen as temperatures fall heading into winter. Uniper has already been given a series of bailouts and rescue loans, but those were quickly overtaken by the scale of the crisis and more robust state support is required.
Surging gas prices and Moscow's move to squeeze supplies to Europe in retaliation for Western sanctions over its invasion of Ukraine has forced the German government to overhaul its whole energy policy after decades of tight cooperation with Russia.
The nationalisation of Uniper is just one part of a broader swoop by the government, which is also in talks over taking control of two other major gas suppliers.
Including loans already provided to the company, the total Uniper rescue package will cost the government around €30 billion, according to reports in German media.
Germany's move putting billions of euros of public money on the line, which is being overseen by Green Party Economy Minister Robert Habeck, risks stoking tensions within the ruling coalition.
Finance Minister Christian Lindner, a fiscal hawk who heads the business-friendly Free Democrats, has insisted that the government restore a constitutional limit on net borrowing next year. It was suspended over the past three years to fund generous spending to offset the impact of the Covid-19 pandemic.
The Uniper rescue also raises questions about the implementation of the government's planned gas levy. The temporary measure, to take effect from Oct 1, is designed to allow suppliers to share the burden of high prices with consumers but has prompted a public backlash.
Around a dozen companies have applied for compensation totalling about €34 billion, according to Trading Hub Europe, which is overseeing the levy, with Uniper guzzling most of the aid.
Uniper's losses from finding alternative suppliers to Russia will likely surpass €18 billion this year, according to Bloomberg Intelligence. The company already reported a loss of more than €12 billion for the first half, ranking among the biggest in German corporate history. BLOOMBERG