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Allocation to gas customers planned
The federal government takes a 30 percent stake in Uniper
07/22/2022, 11:51 am
The plan for rescuing the energy supplier Uniper, which got into difficulties as a result of the gas crisis, is in place: In addition to the aid package worth billions, the federal government is investing around 30 percent in Germany’s largest gas importer. It will also be expensive for customers.
The federal government and the ailing energy company Uniper have agreed on a rescue package worth billions. This also provides for the entry of the federal government. Gas customers will face price increases as part of the rescue package. A surcharge will come on October 1st or September 1st, as Chancellor Olaf Scholz said in Berlin. Uniper is of paramount importance for the energy supply of citizens and companies, said Scholz.
According to Uniper, the stabilization package provides for a capital increase of around EUR 267 million at an issue price of EUR 1.70 per share, excluding shareholders’ subscription rights. The capital increase will result in the federal government taking a stake of around 30 percent in Uniper.
Furthermore, a so-called mandatory convertible instrument of up to 7.7 billion euros should be issued to the federal government. These papers are interest-bearing papers that must be converted into shares by the end of the term at the latest. They are therefore viewed by rating agencies as an equity-like instrument.
The loan granted to Uniper through the state bank KfW is to be increased from two billion to nine billion euros. The federal government explained to Uniper during the negotiations that from October 1, 2022, a general mechanism for passing on 90 percent of the replacement procurement costs for all importers as a result of Russian gas cuts should be introduced. Uniper only has commercial customers, including municipal utilities. However, you could pass on the higher costs in a next step. The agreement provides that the federal government is available for further support should the losses due to replacement purchases that cannot be compensated for by operating profits from the other business areas exceed an amount of 7 billion euros.
The Finnish utility Fortum wants to remain the majority shareholder in the troubled gas importer Uniper even after the stabilization package. Fortum’s stake in the company will be diluted from around 80 percent to 56 percent as a result of the federal government’s entry, the Finnish group announced. Fortum will remain the majority shareholder and will continue to consolidate Uniper as a subsidiary.
Ran into trouble for curbing Russian supplies
The stabilization measures are subject, among other things, to the approval of the EU Commission under state aid law. Uniper will convene an extraordinary general meeting to obtain shareholder approval for the stabilization measures. Uniper had applied for state aid. The company has to buy more expensive gas on the market to fulfill contracts because of the curtailment of Russian supplies via the Baltic Sea pipeline Nord Stream 1. This leads to liquidity problems. With a surcharge, the supplier could pass on price increases and thus get some breathing room financially.
It was initially unclear how the surcharge to all gas customers would work out. The Bundestag and Bundesrat recently passed amendments to the Energy Security Act. The federal government can therefore issue a levy via a statutory ordinance. The levy system should work in a similar way to the EEG levy to promote green electricity via the electricity bill, which has since been abolished.
With the surcharge, politicians would also send a price signal to consumers that energy savings are worthwhile. Due to the sharp increase in procurement costs on the markets, price increases are already coming to consumers.
Habeck present new package of measures
Federal Economics Minister Robert Habeck announced a new package of measures to save energy on Thursday. In view of uncertain Russian deliveries, the provision for the winter should be strengthened. The package also deals with saving energy in public buildings, companies, offices and a mandatory “heating check” in apartments.
Uniper plays a central role in Germany’s energy supply and supplies more than a hundred municipal utilities and industrial companies. Scholz and Habeck had promised Uniper state support.
Habeck said: “We will not allow a systemically important company to go bankrupt and as a result cause turbulence in the global energy market.” The federal government will choose the option that is the best and cheapest for the German taxpayer and the safest for security of supply.