Planned allocation to gas consumers
The federal government takes over 30 percent. shares in Uniper
The plan to save the energy supplier Uniper, which got into trouble as a result of the gas crisis, is ready: in addition to the billion-dollar bailout package, the federal government is investing around 30 percent in Germany’s largest gas importer. It will also be expensive for customers.
The federal government and the ailing energy company Uniper agreed on a rescue package worth billions. This also provides for the entry of the federal government. Gas consumers will have to take into account price increases as part of the rescue package. The surcharge will take place on October 1 or September 1, Chancellor Olaf Scholz said in Berlin. Uniper is of utmost importance for the energy supply of citizens and businesses, said Scholz.
According to Uniper, the stabilization package provides for a capital increase of approximately EUR 267 million at an issue price of EUR 1.70 per share, excluding shareholders’ subscription rights. The capital increase will cause the federal government to take up about 30 percent. shares in Uniper.
In addition, a so-called mandatory convertible instrument worth up to € 7.7 billion should be issued to the federal government. These are interest bearing securities that must be converted into shares by the end of the period at the latest. They are therefore seen by credit rating agencies as an equity-like instrument.
The loan granted to Uniper through the state-owned bank KfW is to be increased from two billion to nine billion euros. The federal government explained to Uniper during the negotiations that a general 90% passing-on mechanism should be introduced from October 1, 2022. Uniper only has commercial customers, including utility companies. However, you can pass on higher costs in the next step. The deal stipulates that the federal government is ready to provide further support if losses from replacement purchases that cannot be offset by operating profits from other business areas exceed € 7 billion.
The Finnish company Fortum wants to remain the majority shareholder of the troubled gas importer Uniper even after the stabilization package. The Finnish group announced that Fortum’s stake in the company will decline from around 80 percent to 56 percent as a result of the federal government’s entry. Fortum will remain the majority shareholder and will continue to consolidate Uniper as a subsidiary.
How the fee looks like is still unclear
Stabilization activities are subject to, inter alia, approval by the EU Commission under the State Aid Law. Uniper will convene an extraordinary general meeting to obtain shareholders’ consent for stabilization activities. Uniper applied for state aid. In order to fulfill the contracts, the company has to buy more expensive gas on the market due to the limitation of supplies from Russia via the Nord Stream 1 gas pipeline. This leads to liquidity problems. For an additional fee, the supplier can pass on the price increase and thus gain some financial freedom.
It is not yet clear how the surcharge will be paid to all gas consumers. The Bundestag and the Bundesrat have recently adopted amendments to the law on energy security. The federal government may therefore impose a fee through a statutory ordinance. The charging scheme should work in a similar way to the EEG fee to promote green electricity through electricity bills that have since been abolished.
Thanks to the subsidy, politicians would also send consumers a price signal that it is worth saving energy. Due to the sharp rise in purchasing costs in the markets, price increases are already looming over consumers.
Habeck presents a new package of measures
Federal Economy Minister Robert Habeck announced a new energy-saving package on Thursday. In view of the uncertain Russian supplies, the reserve for the winter should be strengthened. The package also covers energy saving in public buildings, companies, offices and the mandatory “heating control” in apartments.
Uniper plays a key role in Germany’s energy supply and supplies more than one hundred municipal and industrial companies. Scholz and Habeck promised to support the Uniper state.
Habeck said, “We will not allow a systemically important company to go bankrupt and cause turmoil in the global energy market.” The federal government will choose the best and cheapest option for the German taxpayer and the safest for security of supply.