Commission approves up to €34.5 billion German measure to recapitalise Uniper
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Uniper, currently majority owned by Fortum Oy of Finland, is the largest gas provider in Germany and one of the main gas traders in Europe.
It provides electricity or gas to over 420 local municipal utilities in Germany, out of a total of around 900. Moreover, Uniper is Europe's fourth-largest gas storage company, with its gas storage volume representing about 25% of Germany's total gas storage.
Following Russia's aggression against Ukraine and the subsequent disruption of gas deliveries from Russia, Uniper has incurred serious losses which have put at risk its viability.
In this context, Germany notified to the Commission its plans to grant up to €34.5 billion for the recapitalisation of Uniper. The measure will allow Uniper to keep serving its customers and will help avoid serious disruption on the German natural gas market.
The recapitalisation of Uniper by Germany comprises:
An immediate cash capital increase of €8 billion, which will be subscribed at a price of €1.70 per share.
An authorised capital amounting to up to €26.5 billion. Germany intends to pay this capital as follows: (i) up to €6.5 billion to be granted by the end of 2022 to cover for replacement cost in 2022, and (ii) up to €20 billion to be granted on a quarterly basis in 2023 and 2024 for the replacement cost accumulated in the preceding quarter, therefore with exact amounts to be determined based on costs arising over time.
The replacement cost covers the difference between the cost incurred by Uniper to purchase gas on the gas market at prevailing higher prices, and the price at which Uniper would have been entitled to receive this gas under previous long-term contracts with Russian suppliers.
As of 2023, Germany will pay the capital support to Uniper ex post on a quarterly basis, i.e. after the contracted deliveries have been made and the prevailing upstream purchase price is known. 30 % of the profits of Uniper from other activities will be used to cover part of the replacement cost, and only the remainder will be covered by the measure.
The gas purchased will serve exclusively to meet pre-existing contractual obligations of Uniper under contracts with downstream customers, many of which are municipal energy suppliers in Germany, which were concluded before 9 August 2022, and only for quantities that were covered by delivery obligations under long-term contracts with Russian suppliers that were concluded before the current crisis started, to the extent those suppliers do not meet their supply obligations towards Uniper.
The Commission found that the recapitalisation measure notified by Germany complies with the following:
Conditions on the necessity, appropriateness and size of the intervention: the measure aims at restoring the financial position and liquidity of Uniper in the exceptional situation caused by Russia's war of aggression against Ukraine and the subsequent disruption of gas deliveries, while maintaining the necessary safeguards to limit competition distortions.
The Commission found that the aid amount does not exceed the minimum needed to ensure the viability of Uniper, and it will not go beyond restoring its capital position compared to before the energy crisis.
This will be ensured in two ways: first, the losses that can be covered by the aid are determined by the replacement cost for pre-existing contracts; and second, a claw-back mechanism by which Germany commits that Uniper will return to the State all additional equity gained by the end of 2024 compared to its equity position at the end of 2021;
Conditions on the State's entry: the recapitalisation aid will prevent an insolvency of Uniper, which would have serious consequences for Germany's gas market.
Germany will submit to the Commission a long-term viability assessment for Uniper and its subsidiaries by the end of March 2023; if viability cannot be demonstrated, Germany will have to notify to the Commission a restructuring plan;
Conditions regarding the exit: Germany committed to work out a credible exit strategy by the end of 2023, with the aim to reducing its shareholding in Uniper to not more than 25 % plus one share by end 2028 at the latest, otherwise Germany will have to notify to the Commission a restructuring plan;
Conditions regarding governance and acquisition ban: until the end of 2026 or until when Germany will reduce its shareholding in Uniper to not more than 25 % plus one share, whatever the earlier, Uniper (i) will be subject to strict limitations as regards the remuneration of its Board of Management, including a ban on bonus payments; and (ii) will not to publicise the State support as a competitive advantage.
In addition, until the end of 2026, Uniper will be prevented from acquiring a stake in other companies, unless this is essential to ensure its long-term viability;
Commitments to preserve effective competition: Uniper will divest certain parts of its business, which represent a significant part of its earnings before interest, taxes, depreciation, and amortization.
This includes notably the Datteln IV power plant in Germany, the Gönyu power plant in Hungary and a number of international subsidiaries. Uniper will also release parts of its gas storage and pipeline capacity bookings, making them available for competitors.
Those measures are accompanied by business strategy adjustments which will allow increased competition in the market, e.g. by limiting the long-term contracts and sales to business clients;
Public transparency and reporting: Uniper will have to publish information on the use of the aid received and on how it supports activities in line with EU and national obligations linked to the green and digital transition.
Monitoring: A trustee, who will have to be appointed by Uniper and approved by the Commission, will monitor and ensure, under the Commission's instructions, compliance with the decision, including the different commitments. The trustee will report periodically to the Commission.
The Commission concluded that the recapitalisation measure will contribute to prevent serious disruption on the German natural gas market. ■