Germany bails out gas subsidiary of Finnish state-owned energy supplier Uniper

The German government is bailing out the country’s biggest importer of Russian gas used to fuel industry, generate electricity and heat homes.

Chancellor Olaf Scholz announced on Friday that the state would take a 30% stake in Uniper as part of a rescue package prompted by surging prices for natural gas and reduced Russian deliveries. 

Uniper is majority-owned by Finland-based Fortum, which in turn is majority-owned by the Finnish government.

Scholz said the owners would effectively be making a “substantial contribution” to the rescue by having the value of their holdings diluted. Fortum’s stake will go from about 80% to 56%.

The rescue package involves a roughly €267 million capital increase signed by the German government alone and a mandatory convertible instrument of up to €7.7 billion being issued to the government — in tranches and as Uniper’s liquidity needs require. 

An existing €2bn of credit facility from Germany’s state-owned KfW development bank will be increased to €9bn.

Uniper ‘of paramount significance,’ says Scholz

Finland’s minister responsible for state-owned enterprises Tytti Tuppurainen said in a statement that her government’s main objective in negotiations with German counterparts had been to ensure that Helsinki’s ownership value in Fortum was preserved. 

“The solution should not involve granting additional financing from Fortum or the state, and that the shareholder loan of €4bn granted by Fortum and the parent company’s guarantees of €4bn issued on behalf of Uniper should remain in force.”

Fortum CEO Markus Rauramo described talks with the German government as intense but “conducted in a good spirit”.

Rauramo said Uniper is critical for energy security in Germany and Europe. The German energy company has become entangled in a situation where “Russia is using energy as a weapon against Europe as part of the war in Ukraine,” he said, adding that “no company has been able to fully prepare for such a business risk.” 

Uniper had previously downgraded its financial outlook for this year, pointing to a sharp reduction in gas deliveries by Russia’s state-owned Gazprom in recent weeks that has forced it to buy substitute supplies at significantly higher prices.

Scholz, who interrupted his summer vacation for the announcement, said Uniper is “of paramount significance for the economic development of our country and for energy supply to individual citizens, but also to many companies.”

“It was necessary to stabilize Uniper now,” he told reporters in Berlin. “If I remember rightly, about 60% of gas imports in Germany are ultimately organized in a certain way via this distributor.” 

“That is a very, very big chunk, so it’s clear you can imagine that there would have been practically no company at the end of these supply chains that wouldn’t be affected.”

Gazprom reduced the flow of gas through the Nord Stream 1 pipeline from Russia to Germany — the latter’s main source of Russian gas — by 60% in mid-June, pointing to technical issues that German officials dispute. Russian gas recently has accounted for about a third of Germany’s supply.