DThe EU Commission has approved German billions in aid for the ailing gas importer Uniper. The federal government can support the company with up to 34.5 billion euros, as the competition watchdog announced on Tuesday evening. According to the EU Commission, a number of obligations are linked to the approval of state aid for the extensive nationalization of the energy company.
The energy group will sell certain parts of its business, which accounted for a significant part of its earnings before interest, taxes, depreciation and amortization, announced the competition authorities in Brussels. This includes the Datteln IV power plant, the Gönyu power plant in Hungary and a number of international subsidiaries. “With the EU approval, the last hurdle has been cleared and we now know the framework conditions under which we will shape the future of Uniper,” explained CEO Klaus-Dieter Maubach.
In the evening, Uniper published a list of the subsidiaries and parts of the company that must be sold by the end of 2026 at the latest. In addition to the majority stake in the Russian Uniper business and the coal-fired power plant in Datteln, this also includes the German district heating business, the North American electricity business and trading in marine fuels. This also includes holdings in two pipelines and in a Latvian gas company.
The federal government is obliged to reduce its share by 2028
In addition, until the end of 2026, Uniper may only buy companies that are necessary to ensure the company’s continued existence or to decarbonize Uniper’s business. The EU Commission must approve such purchases.
As Uniper further reported, the federal government undertook as part of the EU approval to reduce its stake to a maximum of 25 percent plus one share by 2028 at the latest. The capital increase decided by the general meeting on Monday will now be implemented immediately. “It is also planned to use part of the authorized capital in 2022.”
The Commission had already approved the nationalization of the company under merger and antitrust aspects on Friday. This clears the way for nationalization. The measure will allow Uniper to continue to supply its customers and help to avoid serious disruptions to the German gas market.
According to the EU Commission, the German measure is specifically about an immediate capital increase of eight billion euros, which will be subscribed at a price of 1.70 euros per share. In addition, a further capital increase of up to 26.5 billion euros is planned by 2024.
Millions of households would have suffered from bankruptcy
Uniper has gotten into trouble because of the Russian gas supply stop, as prices have multiplied. The company has to buy the missing gas from Russia at a higher price on the market in order to fulfill old supply contracts, which leads to liquidity problems.
The wholesaler, which used to be heavily dependent on Russia, is a supplier to around 500 municipal utilities and around 500 other major industrial customers. Uniper’s bankruptcy would probably have triggered a domino effect that would also have caused difficulties for numerous customers.
If an energy supplier fails, municipal utilities usually step in. However, since Uniper counts these regional basic suppliers among its customers, they too would falter. They would have to source the natural gas elsewhere at higher prices. The costs passed on would in turn burden millions of households and many companies.
State aid is subject to European rules. The EU Commission, as the guardian of fair competition, checks whether they intervene in a discriminatory manner in the market. For example, if Germany were to subsidize a certain company so heavily that it could force a competitor from another country out of the market, this would not be compatible with EU competition law. The competition rules are also intended to ensure that no monopolies arise that could arbitrarily increase prices.
