Germany unveils a €15bn bailout to prevent collapse of power utility Uniper

Germany has agreed to provide a €15bn bailout to Uniper to prevent the company to collapse in the wake of Russia’s moves to reduce gas deliveries given its critical role for the country's energy supply. The German government will take a 30% stake in the power utility, reducing the ownership of its parent company Fortum from 80% to 56%. Under the agreement, the country will buy 157 million new ordinary Uniper shares for €267m and make available capital of up to €7.7bn via a mandatory convertible instrument. In addition, the state-owned investment and development bank KfW will increase an existing credit line by €7bn to €9bn in total. The bailout plan needs to secure approval from the European Commission as well as Uniper shareholders and needs confirmation of Uniper's investment grade rating by agency S&P. The German federal government, Uniper and Fortum aim to reach an agreement on a long-term solution by the end of 2023. The country also plans to introduce a mechanism for all gas importers to pass through 90% of the replacement costs for missing Russian gas as of 1 October 2022. It would be offset by more welfare support to shield poorer households.

Uniper owned and operated 31.6 GW of power plants at the end of 2021 (-2 GW compared to 2020), with 48% of gas, 20% of hard coal, 12% of hydro, 9% of other energy sources, 6% of lignite and 5% of nuclear. Most of the power plants are located in Germany (9.4 GW), where the company is the fourth largest power utility in terms of installed capacity, Russia (9 GW), the United Kingdom (6.4 GW) and Sweden (4.7 GW). The group's total generation increased by 15% to 109 TWh, with 54% of gas, 17% of hard coal, 12% of hydro, 12% of nuclear and 6% of lignite. Gas-fired generation rose by 54% in 2021, coal-fired generation by 60%, and nuclear production by 12%.