The German Government has agreed to buy almost all the shares of the private gas utility Uniper in effect nationalizing the company. It follows the Russian move to slash the delivery of pipeline gas. To deliver on its long-term contracts Uniper has to buy gas from elsewhere at much higher prices. This led to a devastating loss of 12 billion Euros during the first half of the year.
Uniper is not the only gas company that is facing losses but several gas companies have a difficult time across Europe.
Earlier as a general measure to prop up the sector, the German Government was looking at measures to settle the levy on gas close to 2.5 cents per kilowatt hour to be paid by consumers. After Uniper’s acquisition by the Government, it’s not very clear that it will be possible.
According to experts after the nationalization of Uniper, the government would end up getting the money that gas consumers paid with the levy on gas. It means it will not be a levy anymore but a tax and the government and the government can impose taxes under very specific circumstances which do not apply here.
So after nationalization and eight billion Euros provided more money may be needed to keep Uniper afloat. This is the result of Germany’s long dependency on cheap Russian Gas.
Uniper is the largest importer of Russian gas and its acquisition follows the German Government taking control of a Russian-owned oil refinery under the trusteeship of the industry regulator and taking over the Schwedt plant last week.
This is being seen as an attempt by the German Government to take control of the energy business with a wider European vision to respond to the winter crisis. Also, it’s expected that by the end of September, another European nation France is also starting the process of taking over EDF (EDF.PA). There has been a delay due to the complexity of clearing the offer price.