Germany nationalizes Uniper, UK separates energy subsidies

The German government will own about 99% of Uniper and 8% of the Finnish parent company Fortum (FOJCF)German Economy Minister Robert Habeck told reporters in Berlin on Wednesday.

Uniper provides 40% of the country’s gas supply and is essential to large companies and private consumers in Europe’s largest economy.

In July, Chancellor Olaf Scholz announced that the government would step in to save Uniper with a package worth up to 15 billion euros ($15.3 billion), after it was brought to its knees by months of Russian supply cuts and soaring spot market prices.

Under the rescue deal, the government committed 7.7 billion euros ($7.8 billion) to cover potential future losses, while state-run KfW Bank agreed to increase its credit facility by 7 billion euros ($7.1 billion).

But Habeck said the situation has “significantly worsened” since Russia cut off gas supplies to Europe through the Nord Stream 1 pipeline indefinitely on September 1, citing an oil leak.

Russian gas had to be replaced by expensive alternatives, which led to higher consumer bills.

Despite the suspension of gas supplies via Nord Stream 1, German gas reserves are filled to more than 90% of their capacity, European storage company GIE AGSI+ said on its website.

However, the European energy crisis will not end.

Habeck said the country could “go through a good winter” without Russian gas, but cautioned about “really empty” supply levels in the following period.

Details of support for UK business

Germany is not alone in paying a heavy price to overcome gas shortages. Together, the European Union and the United Kingdom have committed more than $500 billion in aid to families and businesses to help them deal with the high cost of energy.

On Wednesday, the British government provided more details of its plan to protect the economy over the coming winter. It said it would cap electricity and gas costs for companies at less than half the market price for an initial period of six months.

The announcement follows a commitment made earlier this month to cap average home energy bills at 2,500 pounds ($2,834) a year for the next two years.

British Finance Minister Kwasi Quarting said he would detail the total cost of the program on Friday.

Analysts said the total bill could be as high as 150 billion pounds ($170 billion). Combined with tax cuts promised by new Prime Minister Liz Truss that could blow up British government borrowing at a time when debt repayment costs are rising and the pound is already trading at 37-year lows as investors worry about the fragile health of the British economy.

Anna Cuban contributed to this article.

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