Germany Weighs Nationalizing Uniper To Avert 'Lehman-Like Contagion' As Energy Crisis Worsens

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by Tyler Durden
Wednesday, Sep 14, 2022 - 01:45 PM

Russia has curbed natural gas supplies to Europe amid soaring tensions over its invasion of Ukraine, with the effect of sparking an unprecedented energy crisis across Europe, impacting Germany the most. 

The German government's primary concern is avoiding a 'Lehman-style' collapse of its energy industry. 

Bloomberg reported, citing people familiar with the matter, that German officials are mulling over increasing their stake in troubled NatGas importer Uniper SE above 50% -- there's also talk about nationalization. 

Uniper needs additional support from the German government after tapping into rescue packages worth as much as 20 billion euros ($20 billion), according to one source. Soaring NatGas prices and Russian energy giant Gazprom's supply cuts via the Nord Stream 1 to Europe have led Uniper to millions of euros per day in losses, which Berlin's first rescue package for a 30% stake in the utility was in July.  

Both Uniper and the German economy ministry declined to comment on the Bloomberg report. 

Another person who asked not to be identified because rescue talks are behind closed doors said Chancellor Olaf Scholz's administration is preparing to inject billions of euros into the faltering utility that will raise the government's stake over the 50% threshold. 

"Nationalisation is the only solution left, Uniper's capital resources are totally under water. Mathematically speaking, there is nothing else that could be done," a source close to the matter told Reuters.

Shares in Uniper were down as much as 12% as of 0630ET following the report. 

Uniper's Finnish parent company Fortum Oyj released a statement that said no decisions have been made "beyond what was agreed in the stabilization package in July" but added that "alternative solutions" are being discussed. 

"The deteriorating operating environment and Uniper's financial situation have to be taken into account while Fortum, the German government and Uniper continue their discussions on a long-term solution," Fortum said, adding that it would "update the market as and if necessary."

Ahead of the cold season, which is just around the corner, Germany appears to be shoring up its energy companies, with the possibility of even nationalizing some to avoid a systemic crisis.