Energy Transition

'Negotiations in final stages' | Germany may take control of Fortum's Uniper

Next to nationalising troubled utility, Berlin may also inject capital to avoid collapse of country's biggest gas trader

Worker at Uniper's Etzel gas storage facility
Worker at Uniper's Etzel gas storage facilityFoto: Uniper

Finnish state-owned utility Fortum said that ongoing negotiations for a stabilisation of its German unit Uniper could soon lead to the German state taking control of the near insolvent unit that is a major gas trader and also has been building up a base in renewable power and green hydrogen

“Fortum confirms that the negotiations are in the final stages and that the elements of the agreement under negotiation include a sale of Fortum’s Uniper shares to the German State, return of the financing Fortum granted to Uniper as well as a planned capital injection by the German State to Uniper,” Fortum said, confirming an earlier story by the Bloomberg news agency.

No final agreement is in place yet, while Fortum shares have been suspended from trading on Nasdaq Helsinki.

Uniper – and indirectly Fortum – so far are the largest victims among western energy companies from Russia’s curtailment of gas flows to Europe and Germany in particular in response to sanctions against the invasion of Ukraine.

Germany in July had taken a 30% stake in Uniper and also said it would provide a combined €14.7bn ($14.69bn) in convertible instruments and loans by state-owned bank KfW as part of a massive rescue package for the Fortum subsidiary. As the company is Germany’s largest gas importer, it is considered key to maintain the country’s critical infrastructure, prompting Chancellor Olaf Scholz to pledge to do “whatever matters” to save Uniper.
The summer rescue was not enough, however, and with Finland refusing to channel more of its own resources into the near insolvent unit and Russia meanwhile having stopped gas flows to Germany completely, Berlin now seems to be willing to take full control of Uniper.

Previous German interventions in large companies, such as airline Lufthansa, which entered turbulence in the wake of Covid-19 lockdowns, have been successful and actually earned the state large amounts of money in the medium term. That is less likely in the case of Uniper, though, as the utility’s business model so far has depended to heavily on the import of (formerly) cheap Russian gas.

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Published 20 September 2022, 15:21Updated 20 September 2022, 15:21
EuropeGermanyUniperFortumgas