Germany Nationalizes Uniper in Aftermath of Russian Energy Supply Cuts

UTC by Tolu Ajiboye · 3 min read
Germany Nationalizes Uniper in Aftermath of Russian Energy Supply Cuts
Photo: Depositphotos

Reports state that Germany will buy out Fortum’s sizable stake in Uniper as the global energy crisis worsens.

Germany has agreed to nationalize energy giant Uniper in a bid to prop up the industry amid the global energy crisis. According to fresh reports, the German government will buy out the 56% company stake owned by Finland’s Fortum for an additional 500 million euros. This development follows Germany’s initial agreement in July to bail out Uniper with a 15-billion-euro ($14.95 billion) rescue deal. In total, the state now appears set to own approximately 99% of the Düsseldorf-based energy company.

In a recently statement, Fortum hinted at the reason for the German government’s increased Uniper ownership stake. According to the Finnish state-owned energy company:

“Since the stabilization package for Uniper was agreed in July, Uniper’s situation has further deteriorated rapidly and significantly; as such, new measures to resolve the situation have been agreed.”

Furthermore, Fortum CEO Markus Rauramo also weighed in on the development, saying that “under the current circumstances in the European energy markets and recognizing the severity of Uniper’s situation, the divestment of Uniper is the right step to take, not only for Uniper but also for Fortum.”

Germany Provides Uniper with Much-Needed Financial Resolution

Uniper, Germany’s largest gas importer, has suffered substantial reductions in gas flow from Russia. The situation resulted from the ongoing Eastern European war triggered by Russia invading Ukraine. Among other things, the effect of the war includes rising energy prices. By nationalizing Uniper, the German government seeks to provide a lifeline to the major energy player. This development is also part of a broader scheme by Berlin to secure power for Europe’s largest economy following Russian supply cuts.

Offering Uniper a veritable safety net marks the German government’s second move in a week to assume control of an energy business. Last week, Berlin also took control of the local subsidiary of Russian oil giant Rosneft in the aftermath of energy supply cessation. Part of this involves placing the Rosneft unit under the regulator and taking over the Schwedt plant. Speaking on the recent rescue moves made by the German government, the country’s economic minister Robert Habeck explained:

“The state will – that’s what we’re showing now – do everything possible to always keep the companies stable on the market.”

Habeck also said that Berlin will impose a gas levy on consumers from October. This should lighten the current financial burden gas importers bear in replacing Russian gas.

Nitty-Gritty of Three-way Deal

Fortum will reportedly deconsolidate Uniper as of the third quarter of 2022. In addition, pursuant to the three-way deal with Uniper and the German government, Fortum will also receive repayment for its 4-billion-euro loan to Uniper. Lastly, the Finnish company will be free from a 4-billion-euro parent company guarantee.

Uniper shares recently plunged 39% to 2.55 euros, as the oil giant floundered financially after the indefinite gas flow cut. Meanwhile, as of press time, Fortum’s shares were changing hands around 14% higher at 13.82 euros.

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