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July 5, 2022

Germany to amend law to bail out energy firms hit by surging gas prices

The government may offer gas company Uniper a bailout package of as much as €9bn.

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The German government is looking to overhaul the law, allowing it to buy stakes in energy firms that are badly hit by the soaring gas prices following Russia’s invasion of Ukraine, Reuters reported.

Moscow stopped gas supplies to Germany and other European nations after the Western countries imposed sanctions on Russia. This resulted in a price surge of non-Russian gas, in turn ‘severely burdening’ the finances of the energy companies.

Germany is now planning to present the amendments to the energy security law to parliament later this week, according to a draft legislation seen by the news agency.

The amendment could include imposing levies on consumers, according to the report.

German Chancellor Olaf Scholz told reporters: “We must brace ourselves for the fact this situation will not change in the foreseeable future, in other words, we stand before a historic challenge.”

As per the new energy proposals, Germany will have the right to take the voting or non-voting stakes in companies related to critical infrastructure in the energy sector.

This will be carried out via the same mechanisms that were used to bail out German companies during the Covid-19 pandemic.

The government is in talks with German gas company Uniper over a possible $9.4bn bailout package, reported Bloomberg News, citing a person familiar with the situation.

As part of this effort, the government is considering applying measures that include acquiring equity stakes, loans, and transferring part of the price surge onto customers, two people familiar with the talks said.

Last week, Uniper said it was looking into raising credit facilities, possible guarantees, or even an equity stake sale to the state.

As a last alternative, the government could take a stake in Uniper, which is the Germany’s largest importer of Russian gas, sources told Reuters.

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