The German government agrees on a nationalization agreement for the energy giant Uniper

The German government on Wednesday agreed to the nationalization of utility Uniper as it strives to keep the industry afloat in the wake of a worldwide energy crisis.

Having already agreed in July to save the major gas importer with a 1[ads1]5 billion euro ($14.95 billion) rescue deal, the state will now buy out 56% of Finland’s Fortum for 0.5 billion euros. The German state will own around 98.5% of Uniper.

“Since the stabilization package for Uniper was agreed in July, Uniper’s situation has further deteriorated rapidly and significantly; as such, new measures to resolve the situation have been adopted,” Fortum announced in a statement on Wednesday morning.

Uniper is Germany’s largest importer of gas, and has been pressured by greatly reduced gas flows from Russia, which has caused prices to skyrocket.

Russian state-owned energy giant Gazprom earlier this month halted gas flows to Europe via the Nord Stream 1 pipeline indefinitely, a move Uniper CEO Klaus-Dieter Maubach told CNBC would worsen the company’s struggles.

Fortum will deconsolidate Uniper from the third quarter of 2022, the company said on Wednesday, while Fortum’s 4 billion euro loan to Uniper will be repaid and the Finnish company will be released from a 4 billion euro parent company guarantee.

“Under the current circumstances of the European energy markets and in recognition of the seriousness of Uniper’s situation, the sale of Uniper is the right step to take, not only for Uniper but also for Fortum,” said Fortum CEO Markus Rauramo.

“The role of gas in Europe has changed fundamentally since Russia attacked Ukraine, and so has the prospect of a gas-heavy portfolio. As a result, the business case for an integrated group is no longer viable.”

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