In an effort to preserve the sector in the context of a global energy crisis, the German government approved the nationalization of utility Uniper on Wednesday.
The state will pay 0.5 billion euros to acquire Fortum’s 56% ownership after agreeing in July to bail out the large gas importer with a 15 billion euro ($14.95 billion) rescue agreement. The German government would eventually hold about 98.5% of Uniper.
“Since the stabilization package for Uniper was agreed in July, Uniper’s situation has further deteriorated rapidly and significantly; as such, new measures to resolve the situation have been agreed,” Fortum announced in a statement on Wednesday morning.
The largest gas importer in Germany, Uniper, has been put under pressure as a result of significantly reduced gas imports from Russia, which have driven up costs.
The Nord Stream 1 pipeline was used to transport gas from Russia’s state-owned energy behemoth, Gazprom, to Europe earlier this month. Uniper CEO Klaus-Dieter Maubach told CNBC that this action would make the company’s problems worse.
According to a statement made by Fortum on Wednesday, Uniper will be deconsolidated starting in the third quarter of 2022. Uniper will also be released from a 4 billion euro parent company guarantee and Fortum’s 4 billion euro debt to the Finnish firm.
“Under the current circumstances in the European energy markets and recognizing the severity of Uniper’s situation, the divestment of Uniper is the right step to take, not only for Uniper but also for Fortum,” said Fortum CEO Markus Rauramo.
“The role of gas in Europe has fundamentally changed since Russia attacked Ukraine, and so has the outlook for a gas-heavy portfolio. As a result, the business case for an integrated group is no longer viable.”