LAST UPDATE: 19:47
In order to ensure security of gas supply, the federal government will maintain control of Gazprom Germania in the long run and will protect the company from insolvency, which is faltering due to Russian sanctions, the German government announced a while ago.
“Our goal is to maintain control of this vital part of the energy infrastructure and to prevent energy security from being compromised,” the statement said. In this context, the chancellery together with the Ministries of Economy and Finance decided today to extend the custody of Gazprom Germania after September 2022, which was provided for in the original decision in April. “This guardianship needs to be better adapted to the needs of securing energy supply and will be settled on the basis of recently amended energy security legislation,” he said.
With a loan the company will receive from the state investment bank KfW, bankruptcy and the chain reaction that it would cause in the market will be prevented. The money will be used to provide liquidity and the gas market and can be used exclusively for Gazprom Germania’s business activities, while they will not be able to go to Russia (with the so-called Ring-Fencing), the government announcement. In the next step, the federal government is considering options for converting the loan into equity in order to ensure security of supply in the long run.
Gazprom Germania is a key company in the supply of natural gas to Germany, as it operates critical energy infrastructure in the country, while its business activities include trade, gas transportation and operation of storage facilities. Gazprom Germania also indirectly depends on the supply of natural gas to many municipal utilities. In order to maintain a smooth operation of supply, it is necessary to ensure the continuity of these business activities, the German government emphasizes.
Gazprom Germania, which belonged to the Russian group Gazprom, has been under the control of the Federal Network Service since April, which has appointed a Managing Director. On May 11, Russia imposed sanctions on Gazprom Germania, causing it financial problems. The failure of gas deliveries as a result of sanctions and the consequent purchase of replacement gas at very high prices, have worsened the company’s financial situation to such an extent that its liquidity will have to be secured through a KfW loan, the government explained in its statement.
Under the new energy legislation, companies that manage critical energy infrastructure can be placed under state control if they are no longer able to perform their duties adequately and there is a risk of undermining security of supply.
SOURCE: ΑΠΕ-ΜΠΕ
Source: Capital
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
