The German government will nationalise utility Uniper, with the bailout for the country’s largest gas importer ballooning to €29bn after it was brought to the brink of insolvency by the fallout of Russia’s invasion of Ukraine.
Germany, which had already taken a 30 per cent stake, is now completely “buying out” Uniper’s previous owner Fortum, paying €480mn for the remaining stake. Berlin will also take on a €7.5bn credit line previously provided to the Finnish energy company by Uniper.
At the same time, the government will recapitalise the struggling utility with €8bn, German economic minister Robert Habeck said on Wednesday. The move comes on top of a €13bn government credit line that was already provided to Uniper this year.
Uniper chief executive Klaus-Dieter Maubach said the agreement allowed the utility to “fulfil our role as a system-critical energy supplier”.
“The amendment of the stabilisation package announced in July was necessary against the backdrop of the further intensification of the energy crisis,” he said.
Once Europe’s biggest importer of Russian gas, Uniper has been brought to the brink of collapse after Moscow cut supplies of natural gas to Europe, forcing it to buy more expensive gas on the spot market in order to meet its supply contracts.
“The role of gas in Europe has fundamentally changed since Russia attacked Ukraine, and so has the outlook for a gas-heavy portfolio,” said Markus Rauramo, Fortum’s chief executive. “Under the current circumstances in the European energy markets and recognising the severity of Uniper’s situation, the divestment of Uniper is the right step to take, not only for Uniper but also for Fortum.”
Fortum will retreat to “clean” power generation, including nuclear energy, in Nordic countries, he said.
Rauramo acknowledged that past strategic decisions had turned out to be “liabilities”. “We now have to face and mitigate the impact of those decisions,” he said.
Fortum has made a total investment in Uniper of €6.5bn. It will also be repaid a €4bn loan to Uniper and be released from a €4bn guarantee.
The Uniper acquisition, undertaken by previous chief executive Pekka Lundmark, who now heads Nokia, is widely regarded as one of the worst deals in recent Finnish business history.
The affair has become increasingly politically controversial, with Finland’s rightwing opposition tabling a vote of no confidence in the country’s centre-left coalition over its handling of the matter. The government is set to survive owing to its parliamentary majority.
“Fortum’s board has made an inevitable decision in an exceptionally uncertain situation,” Tytti Tuppurainen, minister for the EU and ownership steering, said on Wednesday. “Fortum must protect its financial position in a way that preserves the company’s ability to run its core business.”