Embattled gas importer Uniper has started talks with the German government over possible nationalization, the company said.
The terms under discussion would raise the state’s stake in the faltering energy giant to 50%.
The German state took a 30% stake in the group as part of a bailout in July, worth around 15 billion euros. Credit lines were further extended by around 4 billion euros last month, but the situation has worsened since Russia cut off gas supplies to Germany via the Nord Stream 1 pipeline, forcing Uniper to find alternatives.
The Dusseldorf-headquartered company said on Wednesday that discussions over its future, with its biggest shareholder, Finnish utility Fortum, were aimed at “finding a long-term solution”.
Uniper has been pushed to the brink of bankruptcy, forced by the lack of a pipeline to compete in the spot market to buy ever more expensive supplies of LNG gas, which arrives by ship, to fulfill its contracts.
German Economy Minister Robert Habeck has been outspoken in recent weeks about the need to save the company, saying failure to do so risks causing a major collapse in Germany’s energy sector.
He warned that the energy shock could be as catastrophic as the Lehman Brothers crash that triggered massive economic decline and panic in financial markets in 2008.
The economy ministry declined to comment on the talks on Wednesday. But Uniper said its situation had worsened significantly since Russia suspended all gas flows through the Nord Stream I pipeline indefinitely on September 3 after impromptu maintenance work.
Moscow said the shutdown was caused by a leak in the pipeline, the repair of which would have been hampered by the sanctions imposed on it. The German government called this explanation a “ruse”.
According to Uniper, among the solutions discussed by the three parties was a direct capital increase, which could lead to the government holding a significant majority stake in Uniper.
According to some reports, unconfirmed by officials, the government has expressed a desire to fully nationalize the company.
Uniper said: “Since the signing of the stabilization agreement (in July), the European energy crisis has further worsened, due to the fact that at present no Russian gas deliveries are delivered via Nord Stream I, and that gas and electricity prices are very high and therefore volatile.Therefore, since July, Uniper’s financial losses due to rising gas supply costs have increased significantly.
Energy company VNG, another German gas importer, has also asked for state aid. He has asked for money from a so-called gas royalty fund, which is due to be introduced on October 1.
The tax, which has been highly controversial, is intended to stop an avalanche of bankruptcies among gas importers. All gas consumers in Germany will have to pay it, which will add another 2.4 cents to every kilowatt hour of gas used.
Habeck has pledged to ensure that the tax will not be available to companies that have profited from rising energy prices.