West News Wire: Following Uniper’s request for a government bailout to deal with rising natural gas prices as a result of the conflict in Ukraine, German Chancellor Olaf Scholz promised Friday to assist the troubled energy company.
The “stabilization measures” Uniper is requesting are “meant to stop the current accumulation of substantial losses, cover Uniper’s liquidity needs, and protect Uniper’s investment-grade credit rating,” according to a statement.
The government would support the company, which is Germany’s largest importer of Russian gas, according to Scholz.
During a visit to a trade show in Munich, he declared, “This is a company that is of great importance to large parts of the economy and to many consumers.” Everyone can rest assured that we will do our part to keep Uniper alive.
The company said its major shareholder, Finland-based Fortum, was also in talks with the German government to “address the negative impact of the current gas supply restrictions on Uniper.”
“Fortum’s proposal includes a restructuring of Uniper aiming at establishing a security of supply company under the ownership of the German government,” it said.
While the government could take a big stake in Uniper to keep the company afloat or let it pass on higher purchasing costs to consumers, Economy Minister Robert Habeck said Friday that the next steps were still being discussed.
“We won’t let a systemically relevant company become insolvent and cause turbulences on the global energy markets,” he said. “We will act.”
Uniper downgraded its financial outlook for this year last week, pointing to a sharp reduction in gas deliveries by Russia’s Gazprom in recent weeks that has forced it to buy substitute supplies at significantly higher prices.
“Since Uniper cannot yet pass on these additional costs, this results in significant financial burdens,” it said at the time.
Germany activated the second phase of its three-stage emergency plan for gas supplies last month. Triggering the third stage would allow the government to determine which sectors and companies gas suppliers need to prioritize, effectively amounting to state energy rationing.