EU imposes tough conditions on Germany’s Uniper bailout

The European Commission has approved the German government’s bailout of stricken gas importer Uniper, but imposed a set of onerous conditions that include forcing it to sell one of Germany’s most modern power plants.

Uniper will have to divest the Datteln 4 coal-fired power station in the Ruhr industrial region, which only came on line in 2020 and is considered one of the most advanced facilities of its kind. It will also have to sell a gas-fired power plant in the Hungarian city of Gönyu.

The commission’s decision opens the way for the German government to buy 99 per cent of the company’s shares. Some 70 per cent will be acquired from its previous majority owner, Finnish state-owned energy group Fortum, and the rest from smaller shareholders.

Fortum announced on Wednesday that it had concluded the sale of its Uniper stake to the German state. But under the deal approved by Brussels, Berlin will also have to reduce its stake in Uniper to a little more than 25 per cent by 2028.

Harald Seegatz, head of Uniper’s works council and deputy board chair of the supervisory board, described the commission’s demands as “hard cuts” for the company. The proposed divestitures of Datteln 4, and of Uniper’s district heating business, were, he said, “particularly painful for the colleagues affected in Germany, just a few days before Christmas”.

Uniper said the conditions from Brussels were “painful” but “don’t impair the company’s future”.

As Europe’s largest buyer of Russian gas, Uniper was one of the main corporate casualties of Russia’s invasion of Ukraine, which plunged Germany into its worst energy crisis since the second world war.

The company began to lose tens of millions of euros a day after Russia’s Gazprom drastically reduced gas supplies to Germany through the Nord Stream 1 pipeline in mid-June.

In order to fulfil its contracts, it was forced to buy gas on the spot market, often at much higher prices. Officials in Berlin worried a collapse of the company might trigger a Lehman Brothers-style meltdown of the whole German energy sector.

The company was taken into public ownership in September, conditional on approval from Brussels, and two months later reported a €40bn loss for the first nine months of the year, one of the biggest in corporate history.

Brussels announced late on Tuesday that it was approving the German government’s bailout, which includes a cash injection of €8bn and could reach up to €34.5bn in total, under EU state aid rules, saying the aid amount “does not exceed the minimum needed to ensure the viability of Uniper”.

But it insisted on divestitures of assets such as Datteln 4 and Gönyu and a “number of international subsidiaries”. It will be forced to sell its stakes in a number of pipelines such as Opal, which links the Nord Stream 1 pipeline to onshore European grids, and its 84 per cent stake in Russian utility Unipro,

Uniper will also have to make parts of its gas storage and pipeline capacity available for competitors.

A person close to the company said it had announced three weeks ago that it wanted to sell its stake in Unipro and Gönyu was its only asset in Hungary, so was dispensable. But other divestitures would be harder: Datteln 4, which had cost more than €1bn to build, was a “stable earner” for the company and the district heating unit was part of Uniper’s “core business”.