Germany flies to help its gas giant – 07/22/2022 at 17:30


The logo of German energy giant Uniper, at the group’s headquarters in Düsseldorf, Germany (AFP/Ina FASSBENDER)

Olaf Scholz’s government will inject billions of euros to save one of the German energy giants, Uniper, asphyxiated by Russian gas cuts, and promises a tariff shield to household hit by the energy crisis.

“Uniper is a company of capital importance” for the country, the German chancellor said on Friday to justify the new massive state intervention that will pay up to 15 billion euros.

Main steps of the rescue plan: the entry of the State into the capital of the group up to 30% and an issue of bonds convertible into shares in the amount of up to 7.7 billion euros.

To avoid bankruptcy, while waiting for these funds to be available, Uniper saw an increase in the credit facility from 2 to 9 billion euros through the public bank KfW.

The public crutch has become essential because of the “energy shortage artificially created in Russia”, accused the Minister of Economy Robert Habeck.

Uniper, Germany’s leading gas importer and saver, has been hit hard by a drop in Russian gas deliveries since mid-June.

Taxpayers also have to put their hands on the wallet: Berlin allows Uniper to pass on gas price increases to its customers.

Their energy bills may increase, Mr. admitted. Scholz. He assured that his government will do “everything, as long as necessary”, to overcome this energy crisis.

German Chancellor Olaf Scholz on July 22, 2022 in Berlin (AFP / Christian Spicker)

German Chancellor Olaf Scholz on July 22, 2022 in Berlin (AFP / Christian Spicker)

Interrupting his vacation for a speech at the chancellery, the leader promised that the state will soon create a new support package for households, which has not yet been determined, and increase housing assistance.

Germany has released more than 30 billion euros for purchasing power, especially in the face of the effects of the war in Ukraine.

– Losses in the billions –

Arguing that without a single turbine, the Russian giant Gazprom reduced its deliveries by 60% through the Nord Stream gas pipeline, essential for supplying Germany.

Uniper must now, in order to fulfill its contracts, get gas in the local market where prices have exploded.

Result: the German group, which employs around 12,000 people worldwide, will lose “more than 6 billion euros” between June and September, its boss Klaus-Dieter Maubach told the press.

Hundreds of German municipal utilities and energy suppliers are Uniper customers.

If the prices are passed on to customers from October, the additional charges could be “around 200 or 300 euros per year for a family of four”, warns Olaf Scholz.

But the state will be there, he assured. “You are not alone”, the Chancellor repeated several times, taking the title of this song dear to many football fans.

Olaf Scholz has promised to prevent Uniper’s bankruptcy which threatens, through a domino effect, to dislocate the energy market and cause shortages.

– Compromised budget –

Mr. Scholz and his government raised the specter of a strong “Lehman Brothers” for several weeks, in reference to the American bank whose bankruptcy led to the great financial crisis of 2008 in the United States and the world.

The headquarters of Fortum Group, majority shareholder of energy giant Uniper, in Espoo, Finland, on July 22, 2022 (Lehtikuva/Roni Rekomaa)

The headquarters of Fortum Group, majority shareholder of energy giant Uniper, in Espoo, Finland, on July 22, 2022 (Lehtikuva/Roni Rekomaa)

But discussions to save Uniper have angered the group’s majority shareholder, Fortum, which is owned by the Finnish state.

The latter pleaded for the transfer of threatened activities to a different entity, which led to the dissolution of the group. Berlin, for its part, asked Fortum to participate in the rescue.

The Uniper bailout and the next domestic aid package could complicate Germany’s return to fiscal discipline, promised for 2023.

Germany has lifted strict financial rules during the coronavirus pandemic to help individuals and businesses. Thus the State entered up to 20% of Lufthansa’s capital.

And since the start of the war in Ukraine, this is not the first time that he has had to help the energy sector. In early April, the government took control of the German subsidiary of the Gazprom group, which operates important gas storage and transportation facilities for Germany.

Here again, aid of 9 to 10 billion euros, through the public bank KfW, should be released.

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