Chancellor Olaf Scholz vowed to protect Germans from rising energy costs on Friday as the government agreed a bailout for key gas company Uniper, which has been brought down by the market turmoil of the war in Ukraine.
Scholz interrupted his summer vacation to give a press conference in Berlin, assuring Germans they would “never walk alone” with the burden of rising gas and electricity bills.
The government is planning housing benefit reform and lump-sum payments to help consumers pay their bills starting next year, Scholz told reporters after the Uniper announcement.
“No one is left alone with their challenges and problems,” he said.
Russia’s war in Ukraine has triggered an energy earthquake in Europe and particularly in Germany, which is heavily dependent on Russian gas.
EU nations have accused Russia of squelching supplies in retaliation for Western sanctions over the war, and Germany has accused Moscow of using energy as a “weapon”.
Russia on Thursday restored critical gas supplies to Europe through Germany via the Nord Stream pipeline after 10 days of maintenance, but in small quantities, and there are suspicions the Kremlin could spark an energy crisis on the continent this winter.
– rescue plan –
The German gas giant Uniper, threatened with bankruptcy due to the crisis, said on Friday that it had agreed on a rescue plan with the government.
The plan “includes a capital increase of approximately €267 million (US$271 million) at an issue price of €1.70 per share” that will “result in the (State’s) ownership of approximately 30 percent of Uniper,” it said Uniper with a statement.
The group will benefit from a public loan of “up to €7.7 billion” in the form of mandatory convertible bonds, which will eventually be converted into shares.
Uniper also plans to increase the credit line available to the company through the public lender KfW from two to nine billion euros.
“Uniper is a company of vital importance to the economic development of our country and to the energy supply of our citizens,” Scholz told reporters after the announcement.
Uniper also said the federal government plans to introduce a general mechanism for all gas importers to pass on the replacement cost of missing Russian gas to consumers starting Oct. 1.
This measure, long-demanded by the energy giant, could send consumers’ gas bills skyrocketing.
– Energy saving –
Scholz said that could mean that a family of four would have to pay 200 to 300 euros more annually.
The government wants to ensure that the impact “is shared across all our shoulders,” he said.
Measures by Moscow to throttle deliveries to Germany since mid-June have forced Uniper to turn to the more expensive spot market for gas to supply its customers, with the energy company bearing the additional costs.
As one of the largest importers of Russian gas, Uniper is an important part of the German energy infrastructure and the largest operator of gas storage facilities.
While the federal government has ordered the storage facilities to be filled before winter, the shortage has also forced Uniper to withdraw gas from its own booked storage capacities.
The group applied to the German government for a bailout on July 8.
Since then, negotiations have been ongoing between Uniper, the German government and Uniper’s Finnish parent company, Fortum.
In addition to increasing gas reserves, Germany is implementing plans to temporarily switch to more coal-fired power.
It also plans to mandate energy savings in public buildings and introduce new rules for heating efficiency in homes and offices.
The European Commission this week asked EU countries to cut their demand for natural gas by 15 percent in the coming months, giving it special powers to impose the demand cuts needed if Russia cuts the gas lifeline.
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