German government agrees to nationalization deal for energy giant Uniper

German government agrees to nationalization deal for energy giant Uniper

Uniper has received billions in financial aid from the German government as a result of rising gas and electricity prices following Russia’s war in Ukraine.

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The German government on Wednesday agreed to nationalize utility Uniper in its effort to keep the industry afloat in the wake of a global energy crisis.

Having agreed in July to bail out the top gas importer with a 15 billion euro ($14.95 billion) bailout deal, the state will now buy the 56% stake in Finland’s Fortum for 500 million euros. The German state will own around 98.5% of Uniper.

“Since the stabilization package for Uniper was agreed in July, Uniper’s situation has deteriorated even more rapidly and significantly; as such, further measures have been agreed to resolve the situation,” Fortum announced in a statement on Wednesday. morning.

Uniper is Germany’s largest gas importer and has been pressured by severely reduced gas flows from Russia, which has pushed up prices.

Russian state-owned energy giant Gazprom earlier this month indefinitely halted gas flows to Europe through the Nord Stream 1 pipeline, a move Uniper CEO Klaus-Dieter Maubach told CNBC would exacerbate the problems of the company.

Fortum will deconsolidate Uniper from the third quarter of 2022, the company said on Wednesday, while Fortum’s €4 billion loan to Uniper will be repaid and the Finnish company will release a €4 billion guarantee from the company. matrix.

“Under the current circumstances in the European energy markets and recognizing the seriousness of Uniper’s situation, the divestment of Uniper is the right step, not only for Uniper but also for Fortum,” said Fortum CEO Markus Rauramo.

“The role of gas in Europe has fundamentally changed since Russia attacked Ukraine, as has the prospect of a heavy gas portfolio. As a result, the business case for an integrated group is no longer viable.”

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