The German government is going into damage control mode, attempting to reverse decades of poorly thought-out energy policy that heavily relied on Russian oil and gas imports. After taking control of several Russian-owned Rosneft refineries last week, Chancellor Olaf Scholz is planning to inject about 8 billion euros into Dusseldorf-based Uniper, overtaking the majority stake from Finnish utility company Fortum Oyi in a historic move to nationalize (and rescue) Germany’s biggest gas importer.
Since Russia began its military operation in Ukraine, Germany’s economy rapidly slipped into a state of chaos, where energy prices were sent soaring to historic levels and decade-old energy policies began to disintegrate when governments realized the EU’s renewable energy sources won’t suffice when Russia shuts the taps off. So, in a desperate move to avert a complete catastrophe ahead of winter, Scholz’s administration bought a 99% stake in Uniper, which is slated for completion before the end of the year.
“Today’s agreement provides clarity on the ownership structure, allows us to continue our business and to fulfill our role as a system-critical energy supplier,” said Uniper CEO Klaus-Dieter Maubach on Wednesday, as cited by Bloomberg. “This secures the energy supply for companies, municipal utilities, and consumers.” The German utility provider already received a 13 billion euro credit line from state lender KfW, with financing expected to continue until the deal is finalized. In total, the government will spend about 30 billion euros on the rescue package.
Uniper began to face significant financial pain after its Russian gas contracts exposed the company to Moscow’s retaliation to Western sanctions. The company was forced to find alternative supplies from overpriced markets, and has thus far accumulated about 8.5 billion euros in losses.
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