German energy supplier Uniper said Wednesday that it is exploring the possibility of the government acquiring a majority holding in the company as its losses mount, a jump from the roughly 30% stake that the state already has pledged to take.
The government put together the rescue package in July after Russia’s cuts to natural gas supplies forced Uniper to buy gas at far higher prices on the market to fulfill its supply contracts. As the energy crisis drives up prices, the European Union’s executive Commission has proposed measures to help households, including tapping into the extraordinary profits of electricity producers.
Uniper is majority-owned by Finland-based Fortum, in which the Finnish government holds the largest stake.
Uniper said in a statement that “due to the increased uncertainties in the operating environment, the parties are also looking into alternative solutions,” including “a straight equity increase that would result in a significant majority participation by the German government in Uniper.”
It added that no decisions have yet been made beyond the July rescue package.
It includes a roughly 267 million-euro capital increase signed by the German government alone and an additional 7.7 billion euros through a tool that provides equity by issuing company shares — as Uniper’s cash needs require. An existing 2 billion-euro credit facility from Germany’s state-owned KfW development bank was increased to 9 billion euros.
The government also decided to introduce a new levy on natural gas, aimed at rescuing importers slammed by the Russian cutbacks tied to the war in Ukraine. It later moved to lower value-added tax on gas from 19% to 7% until the end of March 2024 in an effort to make up for the effect of the surcharge.
Russia’s Gazprom started reducing gas deliveries to Germany through the main Nord Stream 1 pipeline in mid-June, citing alleged technical problems and the effect of Western sanctions. German officials have dismissed that explanation as an excuse for a political decision to create uncertainty and drive up prices.
Russia, which before the reductions accounted for a bit more than a third of Germany’s gas supplies, has since cut off deliveries through Nord Stream 1 altogether.
As a result of that cutoff and extremely high and volatile gas and power prices in Europe, Uniper said its “financial losses due to the higher gas procurement cost have significantly increased.”
In a separate move last week, gas importer VNG also sought help from the German government.