Germany nationalizes its biggest gas importer amid energy crisis

Germany is nationalizing Uniper, its biggest natural gas importer, as part of an 8 billion euro ($7.9 billion) plan to avoid a power shortage this winter.

Europe has been hit by rising prices for natural gas and electricity as a result of Russia’s invasion of Ukraine and the strangulation of gas supplies.

The German government will own about 99% of Uniper and 8% of its Finnish parent Fortum (FOJCF), German Economy Minister Robert Habeck told reporters in Berlin on Wednesday.

Uniper supplies 40% of the country’s gas supply and is crucial for large companies and private consumers in Europe’s largest economy.

In July, Chancellor Olaf Scholz announced that the government would step in to rescue Uniper with a package worth up to 15 billion euros ($15.3 billion) after it was toppled by months of Russian supply cuts and increased spot market prices.

Under the bailout deal, the government committed to provide 7.7 billion euros ($7.8 billion) to cover possible future losses, while state-owned bank KfW agreed to increase its credit line by 7 billion euros ( $7.1 billion).

But Habeck said the situation “has worsened dramatically” since Russia cut off gas supplies to Europe via the Nord Stream 1 pipeline indefinitely on Sept. 1, citing an oil spill.

Russian gas had to be replaced with expensive alternatives, leading to ever-higher bills for consumers.

Although gas supplies through Nord Stream 1 are suspended, Germany’s gas reserves are more than 90% full, European storage provider GIE AGSI+ said on its website.

Still, the European energy crisis is not going away.

Habeck said the country could “get through the winter well” without Russian gas, but warned of “really empty” supply levels in the aftermath.

UK details subsidies for companies

Germany is not alone in paying a heavy price to overcome the shortage of gas supplies. Together, EU states and the UK have already committed more than $500 billion in assistance to families and businesses to help them deal with the rising cost of energy.

The British government on Wednesday gave more details of its plan to protect the economy over the coming winter.

He said he would cap electricity and gas costs for companies to less than half the market rate for an initial six-month period.

The announcement follows a commitment made earlier this month to cap average household energy bills at £2,500 ($2,834) a year over the next two years.

UK Finance Minister Kwasi Kwarteng said he would detail the overall cost of the program on Friday.

Analysts said the total bill could reach 150 billion pounds ($170 billion).

Along with tax cuts promised by new Prime Minister Liz Truss, which could end UK government borrowing at a time when debt repayment costs are rising and the pound is already trading at lows of 37 years, as investors worry about the fragile health of the British economy.

— Anna Cooban contributed to this story.