Uniper reveals near-doubling of bailout cost to €51bn

The cost of bailing out German utility Uniper will be up to €25bn more than previously forecast, the company said on Wednesday, almost doubling the total to as much as €51bn.

Uniper, which was brought to the brink of collapse this year as gas prices surged in the wake of Russia’s assault on Ukraine, said a previously planned capital raise of €8bn would “not be sufficient” and that it planned to issue more shares to the German government to cover future losses.

“The capital measures agreed with the German government will end months of uncertainty for our company and our customers,” said Klaus-Dieter Maubach, chief executive of Uniper.

“Now it’s clear how we can bear the enormous costs resulting from the Russian gas cuts, which are still being borne mainly by Uniper,” he added.

The move comes weeks after Uniper, once Europe’s biggest importer of Russian gas, reported a €40bn loss for the first nine months of the year, one of the biggest in corporate history.

Uniper’s huge losses stem from long-term supply contracts agreed with customers before Russia’s invasion of Ukraine, which mean it cannot pass on higher costs. The company has said it does not expect to stop haemorrhaging money until 2024.

The share issuance, which is subject to approval by the European Commission, is set to be voted on at an extraordinary general meeting on December 19, when the company will also be fully nationalised.

Berlin had initially planned to introduce a gas surcharge for companies and municipalities to help support Uniper and other German gas importers. However, criticism that profitable companies could end up benefiting from the added tax led the government to scrap this idea in favour of a “tailor-made” solution for Uniper.

Fearing a collapse would ripple through the German economy, Berlin has already agreed to buy Uniper from Finnish energy group Fortum and extended a line of credit from state-owned KfW Bank totalling €18bn.

The lifeline for the country’s biggest importer of natural gas, which could now cost up to €51bn, will be Germany’s biggest corporate bailout since the financial crisis in 2008, when the government provided €480bn in support to the banking sector.

“Without this relief, our customers, including many municipal utilities, would inevitably have faced an even higher wave of costs,” said Maubach. “The government support will allow Uniper to continue supplying gas to its customers at the terms contracted before the war.”

Shares in Uniper, which are down almost 85 per cent since the start of the year, fell more than 6 per cent on Wednesday.

The company, which is also building Germany’s first liquefied natural gas terminal in Wilhelmshaven, said it expected the facility to be operational before Christmas.