October 6, 2022

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German government nationalizes Uniper in move to secure energy supplies

German government nationalizes Uniper in move to secure energy supplies

BERLIN – The German government announced on Wednesday that it will acquire Uniper, once the country’s largest importer of Russian gas, to ensure the supply of energy to homes and businesses.

The German state will spend 8 billion euros ($7.9 billion) to acquire shares it does not already own in Uniper, giving it a 99 percent stake. It is buying shares of Fortum, a Finnish energy company, which will sell its large stake in Uniper to the German government for 1.70 euros per share, a fraction of what Uniper shares were worth before Russia’s invasion of Ukraine in February, when they were traded around. 40 euros per share.

In July, the German government took 30 percent stake in Uniper It agreed to a rescue package worth 15 billion euros. The company is responsible for providing about 40 percent of all gas used in Germany, including in hundreds of municipalities that provide heating to homes across the country. The Finnish government owns a stake in Fortum, and Helsinki has refrained from providing further assistance to the German company.

“This step has become necessary because the situation has clearly changed” in recent weeks, German Economy Minister Robert Habeck told reporters. He said that the situation has worsened, especially since Russia All gas shipments stopped via Nord Stream 1 pipeline in early September.

Uniper I lost 12 billion euros In the first half of the year, as a result of having to pay inflated prices to make up for the Russian shortage while maintaining its contractual agreements with customers.

“Today’s agreement provides clarity on the ownership structure, and allows us to continue our business and fulfill our role as the primary energy supplier to the system,” said Klaus-Dieter Maubach, CEO of Uniper, He said in a statement.

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Uniper was once the largest importer of Russian gas in Europe. When energy prices began to rise in January, it got €8 billion from Fortum, which began a €7 billion takeover of the German company in 2017, which was completed three years later. At the time, Gazprom was pumping natural gas through Nord Stream and plans for a second release, Nord Stream 2, were moving forward.

“The role of gas in Europe has changed drastically since Russia attacked Ukraine, as has the outlook for the heavy gas portfolio,” said Marcus Raoromo, Fortum CEO. He said in a statement Explaining its decision to divest. Fortum’s share price rose 14 percent in early trading in Helsinki.

Rauramo told reporters in Finland that Fortum, in which the Finnish state is majority owned, is now facing losses estimated at 5.5 billion euros. He said, “The loss is great.” “Things didn’t go as we had planned.”

The government in Helsinki sought to avoid the company from injecting any additional capital into the German energy provider, amid growing discontent in Finland. Finnish taxpayers, like others in Europe, have faced higher gas prices while their German counterparts have so far been protected, because energy providers cannot pass on higher gas prices directly to their customers.

Berlin’s decision to nationalize Uniper is the latest example of decades of backsliding by governments across Europe Promote a free market approach to the electricity and natural gas industries, as lawmakers move to secure supply in the face of record high energy prices. Uniper was the second energy company in a week that the German government had to bail out by intervening to ensure supply. Berlin, Friday, put a German subsidiary of the Russian oil giant Rosneft in trust as it prepares to stop all crude imports from Russia by the end of the year.

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Germany buys more natural gas from Norway, the Netherlands, and other countries that cool and ship the fuel as LNG. But this has pushed prices to unprecedented levels, with the benchmark European gas contract hitting a record high last month. It is currently trading at just over €200 per megawatt-hour, down from recent highs but more than double the level in early June.

Asked if Uniper had considered filing for bankruptcy rather than seeking help from the German government, Mr Maubach said such a move had been considered, but had never been considered a serious option.

“They had to do what we had to do, buy gas on the open market at much higher prices,” Mobach told reporters.

Joanna Limula Contributed to reporting from Helsinki.