Thu | Oct 6, 2022

Germany considers aid for struggling energy firms

Published:Wednesday | July 6, 2022 | 12:08 AM

The German government has drawn up a plan that would allow it to aid struggling energy companies more easily – a move that comes amid efforts to shore up Uniper, Germany’s biggest importer of Russian gas.

The plan, approved Tuesday by the Cabinet but still requiring parliamentary approval, aims to give the government new and more flexible tools to tackle a potential shortage of gas and prevent market chaos as tensions with Russia over its invasion of Ukraine rise.

Vice Chancellor Robert Habeck, who is also the economy and climate minister and responsible for energy, said Germany must prepare for a possible escalation of problems on the gas market.

“This is about doing everything to maintain basic supplies next winter and keeping energy markets running as long as possible, despite high prices and growing risks,” Habeck said in a statement. The new proposal includes rules similar to those under which the government took a stake in airline Lufthansa as part of efforts to stabilise it in the early phase of the coronavirus pandemic.

Last week, Uniper downgraded its financial outlook for this year, pointing to a sharp reduction in gas deliveries by Russia’s Gazprom in recent weeks that has forced it to buy substitute supplies at significantly higher prices. “Since Uniper cannot yet pass on these additional costs, this results in significant financial burdens,” it said.

Uniper said it was “examining how the liquidity of the company can be further secured” and was discussing “possible stabilisation measures” with the German government. It added that “a number of instruments” could be considered for that. The government hasn’t yet detailed how it might help Uniper.

On June 23, Habeck activated the second phase of Germany’s three-stage emergency plan for natural gas supplies, warning that Europe’s biggest economy faces a crisis and storage targets for the winter are at risk after Russia reduced deliveries.

AP