Uniper and Wien Energie seek state support as energy crisis deepens

Uniper of Germany and Austria’s Wien Energie have called for more emergency government support as the soaring costs of gas and power across Europe threaten the ability of the utilities to operate.

Uniper, one of Germany’s biggest utilities, said on Monday that it had asked for a €4bn increase to an existing €9bn credit line from state-owned bank KfW that would help secure the company’s “short-term liquidity”.

Wien, Austria’s largest energy company, said wholesale gas and power prices were rising so fast that it was now having difficulty financing its operations. The company, which supplies gas and electricity to about 2mn domestic customers, said it was in discussions with the government “to ensure a stable overall situation for energy supply in Vienna and all of Austria.” 

The calls for additional support came after Europe’s benchmark gas price soared by almost a third last week to more than €343 per megawatt hour.

Russia’s decision to choke off gas supplies to Europe has pushed up gas and power prices to record levels, forcing governments to seek alternative supplies and resort to ever more extreme measures to reduce consumption.

Uniper, historically Europe’s largest buyer of Russian gas, said that the volumes it received from Russia had fallen by 80 per cent since June, forcing it to procure alternative supplies at “significantly higher prices” — resulting in cash losses of “well over” €100mn a day.

The Düsseldorf-based company is a major gas supplier and among Europe’s largest electricity generators with 34 gigawatts of capacity. It has about 600 clients in Germany and neighbouring countries, ranging from industrial customers and municipalities to regional distributors.

The rapid run-up in prices had further increased the margin payments — or collateral — Uniper was required to make to exchanges when it trades gas and power, the company added, resulting in “a significant impact on the liquidity situation in recent days.”

As a result, Uniper said it had drawn down the final €2bn from the €9bn KfW credit line agreed in July as part of €15bn rescue package and that it would need to borrow more. Last month the company said it had become a “pawn” in the Ukraine conflict as it recorded a €12.3bn first-half loss.

“We are working at full speed with the German government on a permanent solution to this emergency as otherwise Uniper will no longer be able to fulfil its system-critical function for Germany and Europe,” Uniper chief executive, Klaus-Dieter Maubach said.

KfW and the German government declined to comment.

EEX, the German energy derivatives market, also called on governments to provide more support to utilities struggling to meet margin requirements when buying and selling gas and power.

“[It is] very important that companies receive support in financing collateral (margins) not only from Germany as so far, but also from other member states or the EU,” it said on Monday. On Friday the futures price of German power rose by more than a fifth to €985 megawatt hour.

Peter Hanke, head of the city of Vienna’s finance ministry, told the Austrian Press Agency that Wien Energie could require as much as €6bn from the federal government to help it meet margin calls on contracts.

The city had already provided the company with emergency funding he said, but did not have the resources to continue to do so alone. He stressed that Wien Energie’s underlying business was sound and profitable.

Austrian chancellor Karl Nehammer said he would propose an EU-wide cap on electricity prices at an upcoming meeting of European energy ministers.

“We must finally put a stop to this madness that is currently taking place on the energy markets — and that can only be done through a European solution,” Nehammer said.

Record high energy prices have already forced the German government to reactivate mothballed coal-fired power stations, encourage industrial companies to reduce their gas use and set tough targets for gas storage levels as far as November 1.

Robert Habeck, Germany’s economy minister, said on Monday that German gas storage levels were already at about 83 per cent and would reach the 85 per cent target originally set for October by the start of next month.

“We have made more progress with filling storage than the law prescribes,” he said in Munich on Monday. The ability to drawn on stored gas meant Germany “will no longer have to pay [for gas] at any price”, he added.