The federal government is working under high pressure. Germany’s biggest gas supplier, energy group Uniper, is on the brink of bankruptcy. To secure supplies in the event of an impending Russian energy embargo, the federal government now wants to create a legal basis to bail out the company and gas importers alike. “Spiegel” has a bill that the heads of the ministries of economy and finance and the Federal Chancellery presented on Sunday.
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In fact, Russia has already severely reduced supplies through the Nord Stream 1 pipeline. This has cornered gas importer Uniper. This forced the company to seek help from the government. As announced by Uniper, several instruments are possible for this – such as guarantees and payments of securities, even participation in the form of state equity.
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The president of the Federal Network Agency fears a total failure in the Russian gas supply – and urges the population to save energy.
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The new proposal, which was agreed with the semaphores coalition, is now intended to regulate financial aid and even state intervention in the event of imminent bankruptcy of the gas supplier. According to “Spiegel”, the state is expected to provide loans or guarantees to companies or even act as shareholders if the situation deteriorates further.
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Parliament before summer break: time is of the essence
According to the report, the regulation must be approved by the federal cabinet in a circulation procedure by Tuesday of this week. The law could therefore pass this week, the last week of the session before the summer break. Time is running out. The Uniper group, which is the biggest importer of Russian gas, already has to cover losses from imports from significantly more expensive sources. “Spiegel” reports that the company has to spend double-digit millions every day.
If agreement cannot be reached in the departmental vote by Tuesday, that means the Bundestag will have to meet for a special session. The paragraph “Facilitation for the implementation of stabilization measures” is intended to complement the Energy Security Law. This week is also due to vote on the “ErsatzPowerplant Provisioning Act”, which regulates how gas plants are shut down and replaced with coal plants to have more gas available for storage in gas caves.
Heat pump as an alternative: this is how the federal government wants to start the exchange
Due to Russia’s war of aggression, gas threatens to become scarce in Germany – which could lead to warming problems. The federal government is therefore opting for an alternative: heat pumps. She has already consulted with industry representatives on how to successfully spread this heating technology.
Gas companies are “too big to fail”
According to Federal Economy Minister Robert Habeck (Greens), Uniper should not go bankrupt – the group is simply “too big to fail”. Because when big importers like Uniper go bankrupt, it has fatal consequences for the entire gas market in Germany and Europe. Gas deliveries to industry and private homes would fail. A chain reaction that Habeck likened to the collapse of the big bank Lehman Brothers at the start of the 2008 financial crisis.
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Uniper plays a central role in energy supply and is also the largest operator of natural gas storage facilities in Germany. The government’s goal is to have gas storage tanks nearly full by the start of the heating season in order to be prepared for lost supplies.
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Chancellor Olaf Scholz (SPD) prepared people in Germany for a long crisis with high prices.
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Chancellor Scholz referred to similar models of the corona pandemic, in which the federal government protected companies like Lufthansa from insolvency with the Economic Stabilization Fund. Discussions are ongoing about what is best to ensure that gas supplies do not suffer because a major company cannot continue its business, Scholz said. The financial protection that the state wants to provide must be limited to the end of 2027.
Ministry of Economy expresses doubts
Even though the bill could help alleviate the acute crisis in gas markets, the Ministry of Economic Affairs is not sure whether bailing out individual gas companies will be enough, the “Spiegel” report continues. A growing financial obligation in the coming months could mean that rising costs are being passed on to retail and corporate customers.
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At least that is what is currently provided for in a regulation of the Energy Security Act, which stipulates that higher costs can be passed on to private and industrial consumers. A huge burden in view of the impending cost explosion due to a Russian energy embargo. An alternative federal government solution, which was decided over the weekend, provides for a PAYG mechanism, which is also expected to be decided this week.
cost socialization
In the ARD’s summer interview, Chancellor Scholz answered the question whether gas suppliers or consumers should be helped: “I think it’s important to be active in both fields.”
Gas costs must be distributed evenly between consumers and industry through the pro-rata mechanism. Market area manager Trading Hub Europe (THE), an association of major grid operators, is supporting large corporations like Uniper with resources so they can buy more expensive gas that does not come from Russia. Refinancing can take place through network fees that all customers would have to pay.
“Spiegel” speaks of a socialization “of the losses of Uniper and Cia.”. This “principle of solidarity” is necessary because gas supply companies and their customers are affected to different degrees by price jumps in the gas market – depending on whether the gas is imported from Russia or, for example, from the Netherlands or Norway.
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RND/rix/dpa
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