News: Nationalization of Uniper will cost Berlin 30 billion euros – Expert

Dependence on Russian gas has come at a high cost to the German energy company Uniper, which was the main gas importer not only in Germany but throughout Europe at the beginning of this year. Due to the almost complete cessation of gas supplies from Russia, the company was forced to buy gas on the sweat market at crazy prices. It suffered a loss of 8.5 billion euros this year and was on the verge of bankruptcy.

The government of Olaf Scholz intends to save Germany’s largest energy company, because without Uniper, which provides half of the country’s fuel, the problems of the Germans in the coming winter will increase many times over. Nationalization, according to the Financial Times, could take place as early as next week and cost German taxpayers a total of 29.5 billion euros. This will be Germany’s largest support for the company since the financial crisis in 2008, when Berlin issued 480 billion euros to the banking sector.

The German government, which previously planned to buy a 30% stake in Uniper, is now fully buying out the stake of its previous owner, the Finnish energy company Fortum, for 480 million euros. In addition, Berlin will receive a credit line to German energy companies in the amount of 7.5 billion euros, which was previously provided by the Finns.

At the same time, German Economy Minister Robert Habeck said that the government will recapitalize Uniper by investing another 8 billion euros in it. Recall that the authorities have already provided assistance to Uniper this year for 13 billion euros.

Now, according to the head of Uniper, Klaus-Dieter Maubach, they lose 100 million euros every day. However, with rising electricity prices for German consumers, the losses should drop sharply. Maubach stressed that the nationalization would allow the company to continue its mission as Germany’s critical energy supplier.

The government will pay 8 billion euros for Uniper shares, and will buy them at a very low price – 65% below the closing price of the exchange on September 20. By the way, the company’s shares have fallen in price by almost 90% over the past 7 months.

It is possible, the FT writes, citing its sources that Uniper could use part of the $8 billion capital increase to replace government-backed loans, which would lower the cost of nationalization.

Markus Rauramo, head of Fortum, defends the sale of the German giant, arguing that in the current situation this is the only right decision not only for Uniper, but also for his company. Fortum, he said, will now switch to the production of “clean” energy, including nuclear, for the north of Europe.

In addition to gas-fired power plants, Uniper also has coal-fired power plants. The German energy giant owns an 84% stake in Russian energy company Unipro. Uniper formed out of Eon in 2016 and was bought by Fortum a year later. By the way, at first the management of Uniper was categorically against the deal, so it was possible to close it only in 2020.

The purchase of Uniper, led by then-Fortum director Pekka Lundmark, now head of Nokia, is considered one of the worst in business history in Finland. The Finns paid 7 billion euros for a 73.3% stake in a German energy company. In return, Fortum received 900 million euros in dividends, and now almost half a billion more will be added to them from the German government. The Finnish group will also return the 4 billion loan to Uniper, which will release it from guarantees on the 4 billion euro credit line.

“Obviously we cannot be satisfied with this deal,” Rauramo admitted.

The deal has already had political repercussions in Finland: the right-wing opposition has demanded a no-confidence vote in parliament against the center-left government, which the right says has reacted very poorly to the deal. However, Tytti Tuppurainen, Minister for the EU and Government Companies, believes that Fortum must protect its financial position and therefore did the right thing by deciding to sell Uniper shares to the German government.

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