Germany Nationalizes Largest Domestic Gas Company... 40 Trillion Won of Public Funds Injected

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] The German government announced that it will inject over 40 trillion won of public funds to nationalize 'Uniper,' the largest gas sales company in the country. This move is interpreted as a proactive response to Russia's gas supply pressure and a measure to take the lead in emergency actions such as gas rationing if necessary in the future.

According to Deutsche Welle (DW) on the 20th (local time), Uniper disclosed that "the German federal government is in final negotiations to acquire shares from the parent company Fortum" and "the government has proposed a new bailout package including a capital increase of 8 billion euros (about 11 trillion won)."

If the negotiations are finalized, Uniper will be acquired by the German federal government, and by adding the capital increase shares to the existing 78% stake held by Fortum, it is expected to secure more than 90% of the shares. The amount the German government will spend on Uniper's bailout is expected to reach 29 billion euros (about 40 trillion won), nearly double the 15 billion euros initially announced in July.

Uniper, a subsidiary of the Finnish company Fortum, has faced operational difficulties due to Russia's gas supply pressure. Since July, the German government has been providing bailout support with public funds, raising the possibility of nationalization. Initially, the German government planned to acquire only about 30% of Uniper's shares, but as energy security concerns intensified, it decided to significantly increase its stake.

With growing concerns about a gas crisis during the winter, the German government is expected to accelerate the nationalization of major gas companies. It previously announced the nationalization of the German subsidiary of Gazprom, the second-largest gas company in Germany, and is also negotiating the nationalization of Leipzig-based VNG, the third-largest gas company.

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