The German government is preparing to lend billions to rescue a former arm of Gazprom PJSC now under the control of the country’s energy regulator, according to people familiar with the matter.
(Bloomberg) — The German government is preparing to lend billions to rescue a former arm of Gazprom PJSC now under the control of the country’s energy regulator, according to people familiar with the matter.
A bailout for Gazprom Germania GmbH could come as early as this week, with state-owned bank KfW Group expected to issue a loan in the range of 5 billion euros ($5.2 billion) to 10 billion euros, said the people, who asked not to be identified because the information is private. Talks are still ongoing and plans could change, the people said.
The money would help stabilize the company’s finances and ensure security of supply after Russia curbed shipments to Gazprom Germania in retaliation for Germany seizing the company and its subsidiaries earlier this year. The move forced the unit — which had already been shunned by some clients — to buy in the spot market some of the energy it supplies its customers, paying higher prices.
Germany’s energy regulator, Bundesnetzagentur, said in a statement that it doesn’t comment on speculation and that all those involved with Gazprom Germania are “working intensively to keep business operations going.” The finance ministry didn’t return a request for comment, while a spokeswoman for the economy ministry declined to comment.
Gazprom Germania owns several gas storage sites in Germany, including the country’s biggest facility. It also owns Wingas GmbH, which supplies major industrial users in the country. The company has a retail business that provided a fifth of the UK’s commercial gas in 2020, a trading arm in London and a liquefied natural gas business, putting it in a central position in much of Europe’s energy markets.
Germany is grappling with what to do with subsidiaries of Russian companies in the country, many of which hold assets crucial for security of supply and the German economy. The government is looking at different options ranging from trusteeship — for which it opted in the case of Gazprom Germania — to taking control of the energy companies.
In April, the ruling coalition presented a set of measures that would allow Berlin to put energy firms under state control. Chancellor Olaf Scholz’s administration also set up financing tools to be able to take stakes in case there’s a threat to supplies by injecting capital directly to bail out companies and providing KfW loans.
Gazprom Germania’s trusteeship is set to end on Sept. 30, and there are still no concrete plans for what happens after that. Gazprom Marketing & Trading, the London-based trading arm, has already said it doesn’t expect to return to Russian ownership.