German energy group Uniper applies for $4 bn more in emergency credit

dpa Dusseldorf, GermanyStruggling German energy group Uniper has applied for €4 billion ($4 billion) in extra credit to help it cope with higher energy prices in the wake of the Russian invasion of Ukraine, while its Finnish parent company is also seeking aid.Uniper announced the move in Dusseldorf on Monday, saying the expanded credit line from Germany’s development bank KfW was intended to stabilize the company.An existing credit line of €9 billion has already been used up, the company said in a statement that noted the group is struggling not only with higher purchase prices, but also the collateral that has to be deposited on energy exchanges.Uniper applied for state aid in July and received it two weeks later as part of a rescue package from the government.Gas prices are soaring in Europe as governments seek alternatives to inexpensive supplies from Russia, amid the war in Ukraine. Moscow is also scaling back deliveries to many countries in retaliation for sanctions imposed due to the conflict.Due to the sharp reduction in Russian gas supplies via the Nord Stream 1 Baltic Sea pipeline, Uniper has had to buy more expensive gas on the market in order to fulfil its contracts. This has led to liquidity problems that were compounded by Uniper having to pay security deposits for a large part of the volumes procured on the spot market.The group plays a central role in providing energy to Germany and supplies more than 100 municipal utilities and industrial companies."As long as energy prices rise in Europe, the need for liquid funds will also increase,” Uniper chief executive Klaus-Dieter Maubach said in a statement.When Uniper presented its half-year figures in mid-August, it had only drawn down €5 billion of its credit line but just two weeks later, it has been used up entirely.The KfW loans were only intended to bridge Uniper’s financial needs until the group can pass on the majority of its higher costs to customers through a new German gas levy as of October 1.The group is continuing to work "at full speed” with the German government to find a permanent solution to the emergency, Uniper said on Monday.As talks continue, staff concerns are growing and two trade union leaders and Uniper’s works council called on the German government to step in to help.If further funds are needed to stabilize the company in addition to the rescue package, and the Finnish parent company Fortum does not provide support, "We would like to ask the federal government very urgently to extend its influence on Uniper and to seek a majority stake,” a letter to German Economy Minister Robert Habeck read.The letter, which emerged on Monday, was signed by trade union Verdi boss Frank Werneke, the chairman of the IG BCE trade union, Michael Vassiliadis and three employee representatives.They point out that the general conditions have further deteriorated since Uniper’s rescue package was signed off in July, with the gas price soaring even more than expected. Plus, Russian state-owned Gazprom has cut supplies further."Germany needs Uniper to secure gas supplies to Germany, and Uniper needs the federal government as a reliable partner in a majority position,” the signatories said in the letter, dated August 26.Uniper’s parent company Fortum, meanwhile, is discussing possible financial assistance with the Finnish government, which owns more than 50% of Fortum.Currently, Fortum owns 78% of Uniper. The group still has sufficient financial resources to meet current requirements, Fortum said in Helsinki earlier on Monday. However, the company is also in talks with the Finnish government on how to secure liquidity in the event of further major energy price increases.