The German government wants to spell out possible rescue measures for energy companies such as energy giant Uniper in its energy security law and could eventually buy a stake in the company as a last resort, sources told Reuters on Monday s method.
Uniper is the largest buyer of Russian natural gas in Germany. The company said the current volume of natural gas it obtains from Russia is about 40% of normal volumes.
Uniper, which supplies electricity across Europe and trades natural gas globally, relies on gas deliveries from Russia to meet the needs of its commercial and residential customers and now has to buy gas at higher prices on the spot gas market.
The German Economy Ministry said that government departments are currently discussing amendments to the energy security law. The media quoted sources as saying that these revisions by the German government will also allow the government to quickly impose special taxes to fairly pass on soaring energy costs.
Some media said that the German government’s possible rescue of Uniper may be similar to the German government’s rescue plan for Lufthansa during the new crown epidemic. At that time, the German government passed an aid package of up to 9 billion euros to save Europe's largest airline from bankruptcy.
On Thursday, Uniper said it had received only 40% of its contract commitments from Gazprom since mid-June. In early April, Gazprom cut supply, reducing the amount of natural gas delivered to Germany through the Nord Stream pipeline by 60%.
Russia blames technical problems for gas supply shortage. The tight supply prompted the German government in late June to launch an emergency gas supply plan that could cut off gas supplies to industry in its final stages.
Uniper said it is discussing with the German government measures to stabilize the company's financial situation, including further increasing the credit line it received from the state-owned bank KfW (KfW) (previously 2 billion euros), or making an equity investment .
Uniper CEO Klaus-Dieter Maubach once said:
Due to the Russia-Ukraine conflict and the resulting significant reduction in Russian natural gas supply, business development has significantly deteriorated. Therefore, we are again discussing stabilization measures with the German government.
Uniper said higher costs would hit earnings and withdrew its full-year profit forecast, expecting its earnings before interest and tax to be "significantly lower" than in previous years.
Since the beginning of this year, the company's stock price has fallen by more than 70%.
Uniper was already in trouble before the Russia-Ukraine conflict. In January this year, Uniper was forced to borrow about 10 billion euros from its parent company, Finnish utility Fortum Oyj. In May, credit ratings firm Standard & Poor's warned of the risks Uniper faced and downgraded its rating to BBB-, the lowest rating among investment-grade companies.
Standard & Poor's analysts said the disruption to markets caused by Russia's actions won't go away anytime soon. Uniper's contractual relationship with Gazprom is vulnerable to uncontrollable changes. They also believe that another headwind is the difficulty of replacing Russian gas supplies with scarcer and more expensive coal and natural gas.
Analysts at RBC Capital Markets estimated in a note to clients on Thursday that the reduction in Russian gas supplies and Uniper's rush to find alternative supplies means it is costing the company about 30 million euros a day. Analysts at Credit Suisse put the cost at 40 million euros.
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