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Financial losses have grown: the federal government may nationalize Uniper

Financial losses increased
Federal government may nationalize Uniper

The federal government is considering nationalizing gas importer Uniper, which has run into serious difficulties. Negotiations are underway with the Finnish parent company Fortum. Uniper’s financial losses have “significantly increased” since June.

In an effort to further stabilize Germany’s largest gas importer, Uniper, the federal government’s involvement is being discussed, according to the company. Due to increased uncertainty, stakeholders are exploring “a direct capital increase that would result in a significant controlling stake in Uniper by the federal government,” Uniper announced in a stock exchange announcement. However, no decisions other than the July stabilization package were made.

The news caused panic among investors. The paper lost more than 20 percent and dropped below the four euro mark. In early February – that is, before the start of the Russian invasion of Ukraine – shares were trading for more than 40 euros.

In July, the federal government, the struggling energy company and its Finnish parent company Fortum agreed on a billion-dollar rescue package that also includes the federal government. Fortum currently owns three-quarters of Uniper’s shares.

“After the signing of the stabilization agreement, the energy crisis in Europe has worsened, since at present there are no Russian gas supplies via Nord Stream 1, and gas and electricity prices are very high and unstable,” Uniper explained. “As a result, Uniper’s financial losses have increased significantly since July due to higher gas purchase costs.”

Full nationalization is also possible.

Bloomberg news agency previously reported on a possible controlling stake by the federal government. According to them, in an emergency, the complete nationalization of Uniper is not ruled out.

The environment and the financial situation will be taken into account in the negotiations for a long-term solution. Uniper is in trouble because Russia practically no longer pumps gas to Germany, and Uniper is forced to fulfill its long-term contracts and buys the missing gas at a high price on the market. Pipeline gas from Russia was comparatively cheap.

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