Uniper secures €10bn to cope with gas price volatility
German utility group Uniper has secured €10bn from Finnish parent company Fortum and state bank KfW to avoid a cash crunch amid unprecedented volatility across European energy markets.
Fortum, which has a 76 per cent stake in Uniper, has provided €8bn of credit with the additional €2bn drawn from the government-backed lender.
The move follows a historic rise in gas and electricity prices last month, with Europe’s wholesale natural gas price rocketed by almost 100 per cent, topping €180 per megawatt hour.
This has triggered demand for cash across the industry to cover derivative positions used to hedge contracts with customers.
It is the second time in less than six months Uniper has been forced to seek additional liquidity, reflecting the fallout soaring energy costs are having on utilities and commodity traders, which have also been pushing to secure extra money.
The firm’s finance chief Tiina Tuomela said: “The reason for these additional financial instruments is the unprecedented price increases of – in some cases – several hundred percent within a few months in a highly volatile market environment,”
Uniper is one of Europe largest electricity generators with 34 gigawatts of capacity, it is also a major trader of gas and power.
As it is dependent on gas deliveries from Russia to provide energy to customers – it has faced increasing difficulties following supply shortages and geopolitical tensions between the Kremlin and the West.
This has exacerbated long-standing issues such as low storage levels and creaking energy infrastructure across Europe, which has piled pressure on both energy firms and consumers.
Shares in Uniper, which is among the financial backers of Russia’s Nord Stream 2 pipeline, fell as much as 3.3 per cent following the refinancing.
Uniper explained that while the credit facility provided by Fortum had been partly spent, the KfW loan had not – even if it has been fully drawn..
“Economically, Uniper is a very healthy company,” Tuomela added. “Nevertheless, we consider the agreements announced today to be useful as precautionary measures to increase our liquidity headroom.”
In November, the company revealed a loss of nearly €4.8bn for the first nine months of 2021 because of mark-to-market losses on derivative contracts.#