Germany has forged a plan to save its largest importer of Russian gas from bankruptcy amid huge energy price increases, the government has confirmed.
The chancellor, Olaf Scholz, said the government would take a 30% stake in the energy firm Uniper and also vowed more help would be offered to ordinary people who were struggling to cover soaring energy bills, adopting a crisis slogan addressed to the public: “You’ll never walk alone.”
Scholz admitted the scale of the crisis that Germany found itself in as it struggled to cope with a drastic reduction in Russian gas supplies at the same time as trying to rapidly diversify its energy provision and decrease its dependency on Moscow. Since the start of the Ukraine invasion it has cut its reliance on Russian gas from 55% to 26%, according to the economy ministry.
Interrupting his holiday for a hurriedly called news conference in Berlin, Scholz said his government would be making €7.7bn (£6.5bn) available as hybrid capital to Uniper, as well as extending a €9bn credit line to the company via the state-run bank KfW.
The economy minister, Robert Habeck, has characterised the move, which the government and industry insiders hinted at for weeks, as an attempt to avert a “Lehman Brothers-style crisis”. It came a day after Russia switched the main natural gas pipeline between it and Germany back on after scheduled maintenance works, but released only 40% of the capacity flow.
The business world, led by the German association of industry BDI, reiterated Habeck’s warning on Thursday that the flow of gas was inadequate and too unpredictable for Germany and could yet be turned off altogether. Habeck stressed the urgency of making contingency plans to save gas before the winter, announcing a national emergency energy savings strategy.
Friedrich Merz, the leader of the opposition CDU/CSU conservative alliance, accused the government of acting far too late, arguing that a comprehensive savings programme should have coincided with the commencement of Russia’s invasion of Ukraine five months ago.
The head of the Federal Network Agency, Klaus Müller, has announced that targets to fill Germany’s 23 gas storage facilities will be increased in reaction to the scant supplies, which he admitted would not be sufficient to get Europe’s largest economy through the winter. They stand at around 65%, having not increased for several days. The aim, which Müller admitted might not be feasible, is for a filling level of 95% by 1 November.
Siegfried Russwurm, the president of the BDI, said there was little reason for relief that the gas had started up again, even if the scenario was better than many predicted. There were widespread fears that Russia might have chosen to not turn on the taps at all.
“It remains open whether gas will in fact flow long-term and in the contractually agreed amounts,” he said. “The limited amounts being delivered will lead to high prices and uncertainty amongst customers in industry as well as private consumers.” He added that Germany was in danger of “becoming a pawn in Russia’s extortion politics”.
Many political and industry observers believe it has been in that excruciating position for some time.
Scholz insisted the Uniper bailout was a “one-off”, but did not exclude the government coming to the aid of other utility companies.
Uniper, as Germany’s biggest Russian gas importer, which sells electricity and gas to wholesale customers, was “a company of vital importance for the economic development of our country and for the energy supply of our citizens”, Scholz said, arguing that the funds would allow Uniper the chance to stabilise for the future.
The Finnish energy company Fortum, which has the largest stake in Uniper, has agreed to the plan. The company has been under growing pressure for weeks after being forced to scramble for gas supplies from alternative sources.
Meanwhile, the whereabouts of a repaired turbine, part of the Nord Stream operation, while known to the government, is being kept secret. Habeck accused Russia of appearing to have “little interest” in its return. It was repaired in Canada and returned to Germany earlier this month and is being kept at a secret location before Russia provides the necessary documentation for its shipment. Russia has used the turbine as an excuse for its inability to provide the full amount of gas it is contractually obliged to.
