Many European countries are spending huge sums to save the energy industry

The German government has completed the nationalisation of Uniper, a gas giant. In September this year, Sweden, Finland and other EU countries also announced a bailout plan for energy companies, the scale of capital injection also reached 10 billion.

On December 22nd the German government announced that it had completed the nationalisation of Uniper, a gas giant, after getting the green light from the European Commission. Imports of Russian gas to the European Union have fallen sharply since March, hurting Uniper as Germany's biggest gas importer. It is worth noting that Unipper's predicament is only a microcosm of the energy crisis facing European companies today.

Unipper is Germany's largest importer of Russian gas and one of Europe's largest utilities. In the second half of this year, Gazprom significantly reduced gas supplies to Europe, and the Nord Stream 1 pipeline stopped supplying Europe completely in September. However, about half of Uniper's gas imports come from Russia, and with Russian supplies plummeting, Uniper has had to seek other sources of gas. The company posted a net loss of €40bn in the first nine months of the year, the biggest corporate loss in German history, amid rising gas prices.

In July, the German government came to the rescue of Uniper, saying it would take a 30 per cent stake and buy €7.7bn in convertible bonds, in an effort to avert a convulsion in energy markets in Germany and the EU. But the move didn't completely save Unipper. After several policy changes, the German government announced its first nationalization plan for Uniper in September this year, announcing the nationalization of Uniper. The German government said it would raise 8 billion euros to buy 99 percent of Uniper. In November, Unipper went further, suggesting that the German government would need to inject an additional 25 billion euros to cover the loss of Russian gas supplies.

The German government chose to complete the nationalization of Unipper by the end of the year as its best effort to secure energy supplies this winter and into the future, Bloomberg wrote.

The European Commission also said it "conditionally" agreed to Uniper's nationalisation plan, allowing Germany to rescue the company, after existing shareholders approved the final measures.

The European Commission said in a statement that it had agreed to the recapitalisation of Uniper because of the "serious disruption" the conflict had caused to EU energy markets. The German government's bailout package for Uniper did not meet the minimum level needed to ensure its survival, meaning that even with the help of the German government, it would be difficult for Uniper to recover.

At the same time, the European Commission stressed that the rescue package for Unipper was "aimed primarily at restoring liquidity to the company in the face of the impact of the Russian-Ukrainian conflict on energy markets" and demanded that the German government "develop a credible exit strategy by 2023" unless renewed EU approval was granted. Germany needs to reduce its stake in Unipper to no more than 25 per cent by 2028.

In fact, the German government is not the only one in Europe that has chosen to inject capital into energy companies as Russian supplies shrink. Unipper's predicament is a microcosm of what is happening to European energy companies.

In July, the French government also signaled its intention to fully nationalize electricity giant EDF, offering to pay more than 8 billion euros to complete the takeover, Reuters reported. It is understood that the French government holds an 84% stake in EDF, France's leading electricity supplier with a large number of nuclear assets. However, the company's nuclear power generation has hit record lows this year, its debt pile has exceeded 40 billion euros, and it has plans for new nuclear reactors that will require tens of billions of euros in additional investment.

In an attempt to speed up the nationalisation of EDF, the French government announced in October that its plan to place EDF fully under state control would allow it to move ahead with long-term projects and protect it from stock market volatility.

In addition, in September this year, Sweden, Finland and other EU countries also announced a bailout plan for energy companies, the scale of capital injection also reached 10 billion. European power companies that have signed long-term power trading agreements have suffered huge losses due to soaring domestic electricity prices, Reuters reported. In order to prevent energy companies from falling into bankruptcy crisis, the Swedish government has promised to provide 250 billion Swedish krona   liquidity guarantee for major domestic energy companies, while Finland said it would provide 10 billion euros of liquidity guarantee funds.