Why Germany and Poland bet on the nationalization of energy companies

Between Uniper and Sefe (formerly Gazprom), nationalizations have become almost a fad in Germany. The article by Pierluigi Mennitti from Berlin

In Central-Eastern Europe it is time for the nationalization of companies and pieces of energy infrastructure once in the hands of Russia and which the states concerned now intend to bring back under their control. After intentions and projects announced in recent months, from Germany to Poland we are now moving on to deeds, in the sign of a rediscovered energy sovereignty dictated by the crisis unleashed by the Russian invasion of Ukraine. An epochal event – as politicians have defined it starting from the German Chancellor Olaf Scholz – which has redesigned the energy geography of this part of Europe for decades linked to sources from Moscow, since the times when there was an iron curtain and on the other side reigned the Soviet Union.

In Germany, nationalization has become almost a fashion, which in the homeland of Rhine capitalism, so different from the Anglo-Saxon one, does not make anyone turn up their noses. The one of Uniper, the gas supplier put out of the game by the reduction and then the cessation of Russian shipments and forced to buy gas on other markets at exorbitant prices, is underway. A complex skein to unravel, given that the Finns were also involved, who through their Fortune held the majority. Now, while the Uniper affair is – according to the German government – ​​in the process of being resolved, it is the turn of another brand, Sefe, a gas importing company known until a few months ago under the name of Gazprom Germany.

The Ministry of the Economy in Berlin has in fact announced the start of the nationalization procedure, explaining that the German government will force Russia out of the company by directly acquiring 100% of the shares. Gazprom Germany had already been placed under trusteeship by the Federal Network Agency (the Bundesnetzagentur) which has been based in Bonn since April. But the procedure can only start now that the go-ahead for the operation has arrived from the European Commission. Last Saturday (November 12) the Brussels authority approved aid measures in favor of Gazprom Germany for 225.6 million euros, arguing that the measure follows the rules of the temporary reference framework for crises, according to which companies can receive aid in the event of an energy crisis if private money is not enough. Sefe suffered heavy losses after Russia's invasion of Ukraine. With a 14% share of the German gas supply market and 28% of gas storage capacity, the company is regarded as a systemically important energy company for Germany.

So Robert Habeck's ministry wasted no time and started the procedures already prepared in the past weeks. "The reason is the over-indebtedness of the trade balance of Sefe and the consequent threat of insolvency, which would jeopardize the security of supply in Germany", a spokesman for the ministry explained to the press, "and to avert this danger and keep the operations of Sefe, now we will proceed with the change of ownership and the stabilization of the company". An order to this effect was in fact published in the Federal Gazette earlier this week.

The critical situation is due to the lack of gas supplies from Russia, ministerial officials summarized in Berlin, therefore, importers currently have to get substitute products on the market at short notice and at high costs in order to continue supplying their customers. This has led to losses in the order of billions of euros for Sefe. The government also pointed out that banks and business partners have recently avoided doing business with the company.

In particular, the federal government has ordered a reduction in capital, which means that the previous share capital has been written to zero and Gazprom will lose its deposits. “The capital cut is linked to the compensation. The amount of the compensation is measured by the market value of the Sefe shares”, explained Habeck's spokesman again, “the compensation procedure has not yet been completed”. At the same time, a capital increase with a volume of 225.6 million euros is already underway, which the federal government is supporting itself and which makes it 100% owner.

Sefe, short for “Securing Energy for Europe”, had already received a loan of 11.8 billion euros in the spring from the KfW development bank, the equivalent of Italy's Cassa depositi e prestiti. According to the German government, this loan will be increased to 13.8 billion euros. A large part of this sum will then be converted into shares, which however still need to be approved by the European Commission. The new funds for the SEFE bailout will come from the federal government's now famous (reviled by many European countries) €200 billion defense umbrella, intended to mitigate the consequences of the energy crisis.

Another technically less drastic step (but only because the constitution creates obstacles) was taken in Poland, where the government placed Gazprom's subsidiary Europol Gaz, which holds shares in the operator of the Yamal gas pipeline, into receivership. Warsaw's Development Minister Waldemar Buda, who illustrated the situation to journalists, explicitly wished to recall that, according to the Polish constitution, expropriation is not possible and "this is why receivership was opted for".

Buda said the measure was necessary to prevent paralysis in the company's decision-making process and to ensure the safety of critical gas transportation infrastructure. Europol Gaz is the operator of the 684-kilometer Polish part of the Yamal gas pipeline, through which Russian gas arrives from the Yamal Peninsula in Siberia through Belarus and Poland to Germany.

The Europol operator Gaz was 48% owned by a subsidiary of Gazprom and the Polish energy group PGNiG, while another 4% was held by the company Gas-Trading. In reaction to Russia's war of aggression against Ukraine, the Polish Interior Ministry had already imposed sanctions on Gazprom in April and froze the shareholder's rights.

Still on the energy front and on the Germany-Poland axis, there is one last novelty to record. The PCK refinery in Schwedt, Brandenburg received crude oil for the first time via the port of Gdansk, Poland. This opens up an alternative route for supplies of non-Russian oil, the German Economy Ministry underlined in a statement. The refinery supplies fuel to much of northeastern Germany, including the capital Berlin, supporting business activity, heating and providing fuel for private and public transport.

Until now, the plant was mainly supplied with Russian oil via the Druzhba pipeline.

Here too the German government had intervened by force, placing the majority owners of the refinery, two subsidiaries of the Russian group Rosneft, under state control last September, within the framework of the expected oil embargo against Russia, which will come into force on 1 January . The refinery affair has been at the center of concerns, disputes and some discontent on the part of workers in the past months, until a summit between the federal government and the government of Land Brandenburg put up a series of fences, including financial ones, to cushion the repercussions that could arrive in the near future. The opening of the Polish channel for supplies of crude oil is a first shot in the arm. Negotiations are still ongoing with Polish partners for a possible entry into the refinery and attempts are also being made to offer Schwedt a future perspective beyond oil, aiming for hydrogen.

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/germania-nazionalizzazioni-societa-energetiche/ on Wed, 16 Nov 2022 06:49:15 +0000.