Germany to nationalize major gas importer Uniper

Germany is set to nationalize the company that imports most of its natural gas.

Berlin said its impending purchase of Uniper - from Finnish owners Fortum - will protect the company, which has racked up massive losses, and ensure gas keeps flowing into Germany.

Fortum, which is majority owned by Finland's government, had struggled to secure enough gas supply after Russia began its military activities in Ukraine earlier this year, and reportedly racked up losses of 8.5 billion euros ($8.4 billion) as a result.

The German government is now expected to cover those losses and provide enough operating capital to take the company forward.

Berlin also stepped in to support the ailing company in July, but that bailout, equating to a 30 percent stake in the company, proved inadequate, experts said.

Germany, like many other European nations, has seen the price of natural gas rocket because of supply issues caused by the Russia-Ukraine conflict and Berlin has even hinted that rationing could be needed in the winter, if other energy supplies are not found.

Until recently, Russia supplied around 40 percent of Europe's natural gas, but a combination of European Union sanctions against Russia, limitations on supply out of Russia, and logistical problems has reduced the flow significantly.

Sky News said Uniper hit hard times because that reduced flow meant it had to buy gas from other, more expensive sources, in order to honor fixed-price contracts.

The EU has, meanwhile, vowed to stop using Russian natural gas, and urged greater efficiencies, to ensure less energy is needed. The bloc has also targeted the development and application of new, greener sources of energy.

Germany's Economy Minister Robert Habeck, said on Wednesday the purchase of Uniper comes on top of a 13-billion-euro ($12.8 billion) line of credit Berlin has already extended to the company.

The Financial Times quoted Uniper's chief executive, Klaus-Dieter Maubach, as saying the company will now be able to "fulfil our role as a system-critical energy supplier".

"The amendment of the stabilization package announced in July was necessary against the backdrop of the further intensification of the energy crisis," he said.

Markus Rauramo, Fortum's chief executive, told reporters: "The divestment of Uniper is the right step to take, not only for Uniper but also for Fortum."

He said Fortum will now focus on clean power production.

German broadcaster Deutsche Welle said Fortum has already signed an agreement in principle to move ahead with the sale, which will be finalized through a capital investment and the German government's acquisition of Uniper shares. The transaction will also need to secure various regulatory approvals, support from Uniper's general assembly meeting, and the backing of the European Commission.

DW said Germany's economy ministry said the purchase will create a "clear ownership structure in order to secure Uniper and thus the energy supply for companies, municipal utilities, and consumers".