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ENERGY

Germany prepares energy bailout law as gas prices soar

The German cabinet on Tuesday approved plans to quickly prop up struggling energy companies as a looming Russian cut-off and soaring gas prices heap pressure on the sector.

Germany Economy and Climate Minister Robert Habeck at the SPD Economic Forum on July 5th.
Germany Economy and Climate Minister Robert Habeck at the SPD Economic Forum on July 5th. Photo: picture alliance/dpa | Bernd von Jutrczenka

Germany would “not allow system effects” to ripple through the gas market, where the failure of one company could lead others to go under as well, Economy Minister Robert Habeck told reporters.

The emergency legislation will “facilitate” stabilisation measures for energy companies, including the possibility of the government becoming a shareholder, the ministry said.

German energy company Uniper, one of the biggest importers of Russian gas, entered into talks with Berlin over a possible rescue plan last week.

A 60-percent reduction in gas supplies via the Nord Stream pipeline from Russia in mid-June forced Uniper to pay higher prices for alternative supplies on the spot market.

Unable to pass the cost on, the gas squeeze left Uniper with “significant financial burdens”.

READ ALSO: ‘Scarce commodity’: Germany raises gas alert level as Russia reduces supplies

Bailout options under discussion included extending further credit lines from the public lender KfW or an equity investment in Uniper, the group said.

Officials estimate a rescue package for the struggling energy group could cost around €9 billion, according to Bloomberg News.

Germany has criticised Gazprom’s “political” decision to limit supplies, which the Russian energy company blames on a delayed repairs.

Following the move, Berlin raised the alert level under its emergency gas plan, bringing it a step closer to rationing the fuel.

The government has mandated for its gas storage facilities to be 90 percent full by the beginning of December.

In June, Berlin also bailed out Russian energy giant Gazprom’s former subsidiary in Germany with between nine and 10 billion euros worth of loans after it had been placed under state control.

Securing Energy for Europe, as the company was renamed, is a network operator, and indirectly controls Germany’s largest but largely empty gas storage facility in the northwestern town of Rehden.

Member comments

  1. There’s surely something to be said about bailing out multi million Euro companies whilst at the same times cutting unemployment benefits. But I can’t think of anything….

    FYI Uniper last paid a dividend in May. 7 cents per share to 365.9 million shares.

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ENERGY

Germany to turn thermostat down as gas shortage looms

Germany will limit heating in public buildings over the winter to save on gas as Russia throttles supplies to Europe, Economy Minister Robert Habeck said on Friday.

Germany to turn thermostat down as gas shortage looms

“Public properties – with the exception of hospitals and other parts of the social system, of course – will only be heated to 19C,” Habeck told the daily Süddeutsche Zeitung in an interview.

Public buildings and monuments will also not be lit at night, a measure already taken individually by some cities, as Germany searches for ways to save energy.

READ ALSO: Cold showers to turning off lights: How German cities are saving energy

The recent reduction of gas supplies from Russia, amid tensions over the invasion of Ukraine, has forced the government to act.

Europe’s largest economy, which relies heavily on gas to heat homes and power industry, is trying to wean itself off Russian imports, while avoiding shortages over the winter.

The government has mandated gas storage facilities to be filled almost fully by December and restarted mothballed coal-power plants to take the strain off gas-fired units.

A public information drive has been launched and the government has also subsidised public transport over the summer.

Among the other measures decided in July was a move to ban the heating of private pools with gas.

Habeck, who has said he personally is taking shorter showers to save hot water, said that “more energy savings are needed in the world of work, too.”

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