Nationalization: This is how the federal government wants to save Uniper

The federal government takes over the ailing gas importer Uniper. What’s the deal? What are the consequences? And what will happen to the gas surcharge? tagesschau.de clarifies the most important questions.

What was decided?

The federal government, the financially troubled gas importer Uniper and the previous majority owner Fortum have agreed on the extensive nationalization of Uniper. Today, the parties involved signed a corresponding stabilization package. As part of the deal, a capital increase of eight billion euros is planned, which is to be subscribed exclusively by the federal government.

In addition, the state is buying its shareholding from the major shareholder Fortum at a nominal value of EUR 1.70 per share, which corresponds to a purchase price of EUR 480 million. “As a result, the federal government will take over a total of 99 percent of Uniper,” said the Ministry of Economic Affairs.

Fortum previously held almost 78 percent of Uniper. Fortum itself is around 51 percent owned by the Finnish state. The upcoming separation from Uniper is a painful but unavoidable step, said Fortum boss Markus Rauramo. The Finnish group loses a large part of its investment, which according to Habeck amounted to eight billion euros.

What else does the deal include?

In addition to the nationalization, Uniper receives funding according to its liquidity needs. This also includes the replacement of a credit line granted by Fortum as a result of the energy price crisis, which consists of a shareholder loan of four billion euros and a so-called guarantee line of four billion euros.

In addition, the federal government secures the company’s financing until the capital increase is implemented. The funds for the rescue come from the state development bank KfW.

With today’s decision, the rescue package for Uniper announced in July was once again massively expanded. The conditions of the previous agreement continue to apply – such as the dividend ban and remuneration restrictions for Uniper management.

Why is nationalization necessary now?

The federal government once again emphasized the urgency of the planned nationalization. According to the Ministry of Economic Affairs, Uniper’s capital requirements have increased significantly due to the complete cessation of contractually agreed gas deliveries from Russia and the sharp rise in gas prices. “The resulting increase in replacement procurement costs has exacerbated the plight of Germany’s largest importer of Russian gas.”

According to the Ministry of Economic Affairs, the wholesaler, which supplies more than 100 municipal utilities and large companies with gas, is “a central pillar of German energy supply” and is responsible for around half of gas consumption in Germany. Uniper got into trouble after the Russian attack on Ukraine.

Due to the lack of deliveries, the group has to get the gas expensively on the spot market in order to be able to meet its contracts. Most recently, Uniper reported daily losses of more than 100 million euros. According to the Finnish parent company, the total loss now amounts to around 8.5 billion euros. The previous rescue package is no longer enough.

What is the goal?

After the implementation of the measure, the federal government wants to exert influence on Uniper’s business. “The individual business areas will be looked at very closely,” said Habeck at today’s press conference. The majority takeover gives the state significant say and control rights over the company.

In addition, the deal creates “a clear ownership structure in order to secure Uniper and thus the energy supply for companies, public utilities and consumers,” the statement said. Through nationalization, the federal government can guarantee security of supply in Germany.

How does it go from here?

The stabilization measures are still subject to change. On the one hand, the support package requires the approval of the European Commission under state aid law. On the other hand, the shares can only be acquired by the federal government after regulatory requirements have been met and Uniper shareholders have given their approval. An extraordinary general meeting is to decide the whole thing in the fourth quarter of 2022.

The majority owner, Fortum, expects the transaction to be completed by the end of the year. According to Habeck, the implementation of the nationalization will take at least three months.

Independent of Uniper, the federal government also wants to support other large gas importers if necessary – such as the gas group VNG, which is also badly hit. “As we are showing, the state will do everything necessary to keep the company stable on the market,” said Habeck. “That applies to Uniper. That applies to the other large, systemically important companies in Germany.”

What happens to the gas surcharge?

The planned gas surcharge, which is to be levied as planned from October 1st – at least until Uniper is officially a state-owned company, should also contribute to this stabilization. It is necessary as a bridge to ensure the financial solidity of the energy company, said Habeck. The gas surcharge is intended to support importers who get into difficulties because of the high purchase prices. The companies can pass on their higher costs through the down payments of the gas customers.

Most recently, the Economics Minister had tried to limit the group of eligible companies so that only companies in need benefit. Now the federal government has found a “legally secure way” to “push so-called free riders off the running board,” he said. However, with the now officially announced nationalization of Uniper, a situation has arisen that needs to be examined.

What is the exam about?

The background is the legally unclear question of whether state-owned companies are also allowed to collect the compensation money. With the acquisition of Uniper, such a company would benefit. According to Habeck, whether the surcharge can still be levied in accordance with the constitution when Uniper is a state-owned company is a legitimate question. Financial constitutional reviews are already in full swing.

Top economist Jens Südekum is skeptical about sticking to the measure. “After the nationalization of Uniper, the basis for the gas levy actually no longer applies,” said the member of the scientific advisory board of the Federal Ministry of Economics of the news agency Reuters. “Although the high replacement procurement costs for gas continue to accrue, they can now be covered directly from the federal budget.” This could also be done with the costs for other gas importers such as VNG.

Veronika Grimm, a member of the Advisory Council, also does not consider the gas surcharge to be an effective instrument after nationalization. “The gas surcharge passes on the procurement costs to the supplier, even if the latter is no longer in trouble. I don’t think that’s legitimate,” emphasized the economist Phoenix-Talk of the day.