Germany Takes a Stake in Struggling Gas Provider Uniper – The New York Times

The government announced a multibillion-euro rescue and agreed to acquire a 30 percent stake in the company.
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Melissa Eddy and
The German government agreed on Friday to take an approximately 30 percent stake in Uniper, which is one of the country’s largest suppliers of natural gas and was on the brink of financial ruin, to keep energy supplies flowing and fend off potential chaos in Europe’s energy market.
The bailout, the first time Germany used a new law that is intended to save companies deemed essential to the country’s gas supply, is the latest high-profile example of the financial stress the war in Ukraine is causing in nearby European economies.
Germany is facing its worst energy crisis in decades, after Russia invaded Ukraine in February and Moscow has steadily reduced the amount of gas it sends to Europe. The resulting rise in energy prices upended the business model of Uniper, which imported more Russian natural gas than any other company in Germany.
As costs spiked, the German government began worrying that Uniper’s failure could lead to a collapse of the entire system. Robert Habeck, Germany’s economy minister, recently compared this crisis to the way Lehman Brothers triggered the global financial crisis. On Friday, he said the government would not allow a company like Uniper to fail and “risk endangering the security of Germany’s energy supply.”
As part of the rescue, the German government expanded the credit it granted Uniper to 9 billion euros ($9.2 billion), from €2 billion before, and offered up to €8 billion in equity. The government also announced that it would allow energy suppliers to begin passing on increased costs to private and business consumers to spread the burden as broadly as possible beginning Oct. 1.
“We will do everything that matters, today and for as long as necessary,” Chancellor Olaf Scholz told reporters in Berlin, announcing the bailout as part of a wider package of measures to combat the energy crisis.
“We will make sure that nobody is overwhelmed in the current situation,” Mr. Scholz said.
Uniper’s share price veered wildly after the announcement, jumping at first but later crashing as details of the rescue sank in. The company has lost about 80 percent of its value this year, making it worth less than €3 billion, a sum far overshadowed by the money the government deemed necessary to bail it out.
The Berlin government deliberately made the terms of the deal tough on shareholders and the company, based on a model that it used to keep the German airline Lufthansa afloat two years ago. It will require Uniper to use its own capital and operating profit before the government support will kick in.
That means Uniper will have to absorb up to €7 billion in losses, the company said in a statement. During a news conference on Friday, Uniper’s chief executive, Klaus-Dieter Maubach, estimated such losses at €6.1 billion through September.
With the entry of the German government, the stake held by Uniper’s largest shareholder, a Finnish energy company called Fortum, will drop to 56 percent from 80 percent. Fortum had granted Uniper €8 billion in support and loan guarantees, and the Finnish government, which holds the majority stake in Fortum, had refused to provide further support.
“The German government is making shareholders, including Fortum, take some of the pain,” said Deepa Venkateswaran, a utility analyst at Bernstein, a research firm. She estimated that Uniper was losing €55 million a day.
For decades, Uniper bought most of its gas from Gazprom, Russia’s state-owned supplier, and sold it to German factories and municipalities. Since the start of the war in Ukraine, Gazprom has broken its long-term contracts and begun reducing the amount of gas it provides to Europe, leaving Uniper to buy gas from other providers at higher prices.
Uniper has been in talks with the government for weeks and made a formal request for help on July 8. The company has sought to portray itself as a vital cog in Germany’s energy system that was worth rescuing, not only because it is a leading importer of natural gas that it sells to dozens of municipalities and companies, but also because of its work with the government to build one of the country’s first terminals for receiving liquefied natural gas.
That effort should allow Germany to import fuel from a variety of sources, including the United States, easing its dependence on Russia. Before the Feb. 24 invasion, Russia provided Germany with 55 percent of its natural gas supply. In the weeks immediately after, Germany was able to reduce that dependence by roughly 20 percent.
Uniper is also taking steps to develop hydrogen, which is touted as the clean energy fuel of the future. “I’m pleased and relieved that today’s agreement stabilizes Uniper financially as a system-critical energy partner,” Mr. Maubach said.
Germany’s government is encouraging consumers to conserve energy. It is also replacing gas-fired generators with plants fired by coal and lignite — both of which expel more climate-warming emissions — in an effort to save more gas for heating homes and powering factories.


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