According to a joint statement by the German Economy Ministry and Finance Ministry, the German government has finalized the bailout and takeover of the energy giant Uniper. The government now holds control over 99% of the company’s shares.
On Monday, Uniper’s shareholders approved the rescue deal with the state, and the next day, the European Commission approved the deal. European Commission approval was required because an EU member state was performing the bailout.
The statement from the two ministries noted, “The federal government has acquired a stake in the energy supplier Uniper. The state participation serves to secure Germany’s energy supply.”
In September, as it became apparent Uniper was heading toward insolvency due to the cessation of the supply of cheap Russian pipeline gas, Berlin proposed nationalizing the company to prevent its collapse. Under the plan, Uniper would gain an immediate capital injection of €8 billion ($8.4 billion) as well as further capital infusions of up to €26.5 billion delivered in several injections through 2024.
Under the agreement the state struck with Uniper’s management, the government will gradually reduce the stake it holds in the company to 25% plus one share by 2028.
As the largest gas provider in Germany and the fourth largest gas storage company in Europe, Uniper supplied gas to almost half of the nation’s municipalities. When cheap Russian pipeline gas was plentiful, the company’s revenues soared. However more recently, Russia cut the flow of gas through the Nord Stream pipeline, initially due to maintenance issues which could not be repaired due to the sanctions levied over the war in Ukraine, and later due to undersea sabotage of the pipeline.
Once deprived of cheap Russian pipeline gas, Uniper was forced to purchase gas on the expensive spot market as prices skyrocketed to fulfill its prearranged contracts. Unable to supply it to customers for profit, the company rapidly began to head into insolvency, risking a critical element of Germany’s energy infrastructure.
So far the bailout of Uniper has already cost the German government more than €50 billion.
