Government wants to create "protective shield" for energy companies

Created: 04/07/2022, 18:38

The Nord Stream 1 Baltic Sea pipeline, through which Russian natural gas has been flowing to Germany since 2011, ends in Lubmin near Greifswald.

© Stefan Sauer/dpa

The federal government could invest billions in tax money in energy companies - to save them.

The legal basis for this could soon be created.

Berlin - The federal government wants to create a "protective shield" for ailing energy companies in the gas crisis.

Legal changes are intended to create the conditions for the federal government to be able to invest in companies like Uniper.

In the Corona crisis, the federal government supported Lufthansa with billions of dollars and took a stake in the group.

The Ministries of Economics, Finance and the Federal Chancellery agreed in principle on a draft, as government circles said on Monday.

The "Spiegel" reported about it first.

A draft amendment to the Energy Security Act was also available to the German Press Agency.

This regulates financial aid through to the acquisition of company shares in order to be able to avert the bankruptcy of a gas supplier.

expand room for manoeuvre

The aim is to expand the federal government's scope for action, according to coalition circles.

The traffic light groups are expected to agree on Tuesday.

The circles said that drastic price jumps for gas customers should be prevented with stabilization measures for companies like Uniper, probably worth billions.

The draft states that, in order to ensure security of supply, stabilization measures for "critical infrastructure companies" should be facilitated by the federal government - this is aimed at energy suppliers.

Such measures would only be considered if they were requested by the company concerned.

Russia had severely curtailed supplies through the Nord Stream 1 Baltic Sea pipeline.

As a result, Germany's largest importer of Russian natural gas, Uniper, encountered turbulence and called for state aid.

As Uniper had announced, a number of instruments are possible for this - such as guarantees and security payments through to participations in the form of equity.

That means the state would get involved with Uniper.

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Talks about stabilization measures

The federal government had confirmed that it would talk to Uniper about stabilization measures.

According to a spokeswoman, the Ministry of Economic Affairs is working on solutions “under high pressure”.

A spokeswoman for Economics Minister Robert Habeck (Greens) said the aim was to prepare for a continued tense situation on the energy markets and to fill the toolbox.

The energy markets must remain functional.

The spokeswoman pointed out that Uniper had not yet drawn an existing credit line of EUR 2 billion from the state bank KfW.

As a major gas importer, Uniper plays a central role in Germany's energy supply and supplies many municipal utilities.

However, Uniper is currently unable to pass on additional costs for gas intake to customers - the company had announced that this would result in significant financial burdens.

The state could now give Uniper financial support.

This was referred to as the first option in coalition circles.

The other possibility would be that gas customers would pay price increases - but this could lead to drastic price increases for consumers.

Price Adjustment Right for Utilities

The existing Energy Security Act allows utilities to have a “right to adjust prices”.

To do this, the Federal Network Agency must have formally determined a “considerable reduction in the total volume of gas imported into Germany”, which has not yet happened.

If the mechanism is activated, suppliers could pass on their current additional costs to their customers within a short period of time and lead to large price jumps.

Habeck had warned of a possible "price explosion" at some municipal utilities.

In order to distribute price jumps more fairly among consumers, the federal government is therefore working on a pay-as-you-go system.

This means that loads could be distributed more evenly among all consumers, as it was said.

Gas supply stable at the moment

Energy companies' problems could be exacerbated as Nord Stream 1's annual maintenance work, which typically lasts 10 days, begins on July 11.

Then no gas flows through the pipeline.

The big concern is that Russia won't turn on the gas tap again after the maintenance.

Habeck and the Federal Network Agency had warned of such a total failure of Russian gas supplies by Nord Stream.

The Federal Network Agency wrote in its management report on Monday that the gas supply in Germany is currently stable.

The security of supply in Germany is still guaranteed. Gas will continue to be stored.

The current level of storage in Germany is therefore 61.85 percent.

The primary goal of the federal government is that the storage tanks are almost full at the beginning of the heating period in autumn.

In order to be less dependent on Russian gas in view of the Russian war of aggression in Ukraine and a possible supply failure, gas consumption is also to fall, especially in industry.

More coal-fired power plants should also step in for this.

In addition, more liquefied natural gas (LNG) is to be imported from other countries.

Floating terminals are initially planned for this purpose.

According to Uniper, the state trade supervisory office in Oldenburg gave the green light on Monday for the early start of construction for Germany's first liquefied natural gas terminal in Wilhelmshaven.

Up to 7.5 billion cubic meters of natural gas per year are to be handled via the floating LNG terminal.

That corresponds to about 8.5 percent of the current German gas requirement per year, it said.

The aim is for commissioning to take place next winter.

dpa