On 8 June Fortum’s subsidiary Uniper filed for government support under newly adopted German energy legislation. As Germany's biggest importer of gas, Uniper has been hit hardest by the Russian gas curtailment and as a result is under extreme financial pressure. Since mid-June, Uniper has received only 40% of the contracted gas volumes from Russia and has had to source the replacement volumes in the market at significantly higher prices. Accordingly Uniper has issued a profit warning and withdrawn its full-year financial guidance at the end of June. A few days previously S&P Global Ratings had placed Uniper’s credit rating (BBB-) on CreditWatch Negative.
Fortum is in talks with the German government on how to stabilise Uniper both regarding its business risks and financial position, and thus safeguard security of supply in Germany. Several alternatives are now being proposed and discussed. One of these involves a reorganisation of Uniper’s business portfolio to ringfence the system-critical German businesses under the ownership of the government.
Fortum’s goal is to find a long-term solution (together with the German government) that addresses the consequences of a potentially prolonged or even expanded gas curtailment and further gas price hikes in a way that is sustainable for consumers and Uniper alike, and preserves Uniper’s credit rating.
No decisions have been made yet on any possible solution.
- The new energy legislation adopted on 8 July includes several legislative changes providing the German government with a range of regulatory measures to ensure security of supply in the current energy crisis. This legal framework enables the government to stabilise energy companies in the short-term but also provides tools to address the longer-term structural challenges, especially if the gas curtailment is prolonged, or escalates further.
The amendments to the German Energy Security Act (EnSiG) allow companies in the energy industry to obtain liquidity assistance in the form of guarantees, loans or recapitalisation by the state. It also provides the legal basis for the government to allow the passing on of some or all of the high additional procurement costs caused by the shortage of Russian gas supplies to all gas customers or within existing contracts.
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