# Europe burns cash to help businesses in deepening energy crisis
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-09-21
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Europe Battles Energy Crisis: Uniper Nationalised, UK Caps
Meta Description: Amid soaring energy prices due to Ukraine war, Germany nationalised Uniper while Britain capped prices. Stay informed on Europe's energy challenges.
URL: https://financedigest.com/europe-burns-cash-to-help-businesses-in-deepening-energy-crisishtml

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By Kirsti Knolle, William James and Anne Kauranen

BERLIN/LONDON/HELSINKI (Reuters) -Germany nationalised gas importer Uniper on Wednesday and Britain capped wholesale electricity and gas prices for businesses, as Europe splurged cash to keep the lights and heaters on this winter amid an escalating war in Ukraine.

Russian President Vladimir Putin added to the energy price pain on Wednesday, sending oil and gas prices higher by announcing a partial military mobilisation.

European governments have already earmarked almost 500 [billion euros](https://www.financedigest.com/telecoms-group-orange-signs-sustainability-linked-refinancing-of-6-billion-euros-syndicated-credit-facility.html "Telecoms group Orange signs sustainability-linked refinancing of 6 billion euros syndicated credit facility") ($496 billion) in the past year to shield citizens and companies from soaring gas and power prices, according to research published by think-tank Bruegel.

Russian [cuts to gas supply to Europe](https://www.financedigest.com/ford-to-make-call-on-europe-job-cuts-by-mid-feb-as-buyers-circle-german-site.html "Ford to make call on Europe job cuts by mid-Feb as buyers circle German site") in retaliation for Western sanctions on Moscow over its invasion of Ukraine have left utilities exposed to sky-high spot prices as the scramble for alternative supplies has helped drive up consumer bills.

Uniper has been among the biggest corporate victims, with Germany earmarking another 8 billion euros in the latest step in its rescue while Britain said its new [plan would cost](https://www.financedigest.com/australias-nuclear-submarine-plan-to-cost-up-to-245-billion-by-2055-defence-official.html "Australia’s nuclear submarine plan to cost up to 5 billion by 2055 -defence official") “tens of billions of pounds.” Among the high spenders, France will allocate 9.7 billion euros to take full control of utility EDF.

We have stepped in to stop businesses collapsing, protect jobs, and limit inflation,” Britain’s finance minister Kwasi Kwarteng said, while another cabinet member said the final [cost of its energy](https://www.financedigest.com/top-5-ways-businesses-can-save-on-energy-costs-in-q4.html "Top 5 Ways Businesses Can Save on Energy Costs in Q4") support would depend on how high prices climbed.

More than 20 British power providers have collapsed, many crumbling because a government price cap prevented them from passing on [soaring](https://www.financedigest.com/eex-markets-to-remain-open-as-power-prices-soar-statement.html "EEX markets to remain open as power prices soar – statement") prices.

European gas [prices on Wednesday hit](https://www.financedigest.com/uk-shop-price-inflation-hits-record-8-in-january-brc-2.html "UK shop price inflation hits record 8% in January: BRC") as much as 212 euros per megawatt hour (MWh), below this year’s peak of around 343 euros but up more than 200% from a year earlier. [Oil prices](https://www.financedigest.com/oil-prices-stable-heading-for-weekly-gain.html "Oil prices stable, heading for weekly gain") rose nearly 3%.

[INCREASED RISKS](https://www.financedigest.com/over-half-of-organisations-would-consider-using-cryptocurrencies-for-business-transactions-though-8-in-10-acknowledge-the-increased-risk-of-associated-ddos-attacks.html "Over half of organisations would consider using cryptocurrencies for business transactions, though 8 in 10 acknowledge the increased risk of associated DDoS attacks")

The partial mobilisation is definitely a bullish factor as it increases the [risks of a prolonged war in Ukraine,”](https://www.financedigest.com/ukraines-giant-seed-bank-at-risk-of-being-lost-as-war-rages.html "Ukraine’s giant seed bank at risk of being lost as war rages") said Viktor Katona, lead crude analyst at Kpler.

Uniper’s full nationalisation follows a multi-billion euro cash injection that [proved inadequate](https://www.financedigest.com/traditional-security-defences-may-prove-inadequate-for-effective-gdpr-strategies-warns-aruba.html "Traditional Security Defences May Prove Inadequate for Effective GDPR Strategies, Warns Aruba").

The German government will [buy the remaining stake](https://www.financedigest.com/mfe-offers-to-buy-1-05-stake-in-mediaset-espana-from-vivendi-ahead-of-delisting.html "MFE offers to buy 1.05% stake in Mediaset Espana from Vivendi ahead of delisting") owned by Finland’s Fortum to give the state a 99% holding.

This is clearly not sustainable from a public finance perspective,” Bruegel senior fellow Simone Tagliapietra said of Europe’s overall [energy crisis bill](https://www.financedigest.com/energy-bill-support-pushes-uk-budget-deficit-to-february-record.html "Energy bill support pushes UK budget deficit to February record").

Governments with more fiscal space will inevitably better manage the energy [crisis](https://www.financedigest.com/europes-spend-on-energy-crisis-nears-800-billion-euros.html "Europe’s spend on energy crisis nears 800 billion euros") by outcompeting their neighbours for limited energy resources over the winter months.

‘DO EVERYTHING POSSIBLE’

[German Economy Minister](https://www.financedigest.com/german-minister-says-on-right-track-to-solving-co2-emitting-car-row.html "German minister says ‘on right track’ to solving CO2-emitting car row") Robert Habeck, announcing the Uniper move and other steps to help Germany avoid energy rationing this winter, said: “The state will … do everything possible to always keep the [companies stable on the market.”](https://www.financedigest.com/title-rubber-gloves-market-research-report-2030-top-companies-market-size-and-forecast.html "Rubber Gloves Market Research Report 2030: Top Companies, Market Size and Forecast")

The nationalisation gives the [German government control](https://www.financedigest.com/german-regulator-calls-on-allianz-to-improve-controls-source.html "German regulator calls on Allianz to improve controls – source") of some assets in Russia, a government spokesperson said, adding that it was examining what to do with these.

Germany was more reliant than many others in Europe on Russian gas, mostly supplied via the [Nord Stream](https://www.financedigest.com/denmark-invites-nord-stream-operator-to-help-salvage-unidentified-object.html "Denmark invites Nord Stream operator to help salvage unidentified object") 1 pipeline. [Russia halted](https://www.financedigest.com/russia-halts-gas-to-poland-bulgaria-taking-aim-at-european-economies.html "Russia halts gas to Poland, Bulgaria, taking aim at European economies") flows through the pipeline, blaming Western sanctions for hindering operations. European politicians call that a pretext and [say Moscow is using energy](https://www.financedigest.com/eu-will-propose-windfall-levies-on-energy-firms-von-der-leyen-says.html "EU will propose windfall levies on energy firms, von der Leyen says") as a weapon.

The German government has already put Gazprom Germania, a unit of Kremlin-controlled Gazprom, and a subsidiary of Russian [oil company](https://www.financedigest.com/exxon-sues-eu-in-move-to-block-new-windfall-tax-on-oil-companies.html "Exxon sues EU in move to block new windfall tax on oil companies") Rosneft under trusteeship – a de facto nationalisation. Adding Uniper’s bailout, the bill amounts to about 40 [billion euros](https://www.financedigest.com/mercedes-benz-to-buy-back-up-to-4-billion-euros-in-shares-by-2025.html "Mercedes-Benz to buy back up to 4 billion euros in shares by 2025").

Fortum [CEO Markus Rauram said selling the firm’s stake](https://www.financedigest.com/deutsche-telekom-reaches-majority-stake-in-t-mobile-u-s-ceo.html "Deutsche Telekom reaches majority stake in T-Mobile U.S. – CEO") in Uniper was a painful but necessary step, adding that the company which is majority owned by the Finish state lost about 6 billion euros on its Uniper investment.

[Russia’s gas flows to Europe](https://www.financedigest.com/russias-gazprom-tightens-squeeze-on-gas-flow-to-europe.html "Russia’s Gazprom tightens squeeze on gas flow to Europe") via Ukraine were steady on Wednesday while eastbound gas flows via the Yamal-Europe pipeline to Poland from Germany were halted.

In the United States, Democratic and Republican senators on Tuesday proposed that President Joe Biden’s administration use secondary [sanctions on international banks to strengthen plans for a price cap by G7 countries on Russian oil](https://www.financedigest.com/oil-spills-and-near-misses-more-ghost-tankers-ship-sanctioned-fuel.html "Oil spills and near misses: more ghost tankers ship sanctioned fuel").

Moscow has said it would cut all [oil and gas flows to the West if such a cap was implemented](https://www.financedigest.com/eu-sees-more-work-ahead-to-implement-russian-oil-price-cap.html "EU sees more work ahead to implement Russian oil price cap").

The move by U.S. lawmakers came hours before Putin ordered Russia’s first mobilisation since World War Two, [warning the West that if it continued what he called its “nuclear blackmail” Moscow would respond](https://www.financedigest.com/pitiless-machines-will-kill-your-business-if-you-dont-respond-now-warns-servion.html "‘Pitiless machines’ will kill your business if you don’t respond now, warns Servion") with its vast arsenal.

Several countries have banned imports of Russian crude and fuel, but Moscow has managed to maintain its [revenues through increased crude sales](https://www.financedigest.com/demand-for-secure-and-safer-home-environment-will-increased-revenue-sales-of-baby-gates-market.html "Demand For Secure And Safer Home Environment Will Increased Revenue Sales Of Baby Gates Market") to Asia.

($1 = 1.0087 euros)

[(Reporting by Reuters](https://www.financedigest.com/indonesia-to-tighten-used-shoe-import-controls-after-reuters-report.html "Indonesia to tighten used shoe import controls after Reuters report") bureaux; writing by Ingrid Melander; editing by Edmund Blair and Jason Neely)


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