German energy giant files for bankruptcy after Russia cuts off gas supplies and announces huge losses

Giant German energy company Uniper has announced it is siphoning off millions of euros daily as Russia cut gas supplies to Europe’s biggest economy.

The company has asked the government in Berlin to bail it out of bankruptcy amid expectations that its losses will rise to 10 billion euros this year.

Klaus-Dieter Maubach, the company’s CEO, said the company is experiencing “million dollar cash outflows” in the current environment.

He added that Uniper, one of the largest importers of Russian gas, “cannot stand this for long” in the current situation, and the group has submitted a formal request to the German government for help.

As Russian energy giant Gazprom cut gas supplies to Germany via the Nord Stream pipeline by 60% in mid-June, Uniper had to pay higher spot market prices to make up for the shortfall.

The company said in a statement that it has accumulated “significant losses” due to its inability to bear these costs.

According to Maubach, without state support, Uniper could suffer losses this year “up to 10 billion euros.”

The German government rushed to pass a state of emergency law this week to make it easier to bail out struggling energy companies. Uniper’s request for help includes the possibility that the German state will acquire a stake in it.

The Düsseldorf-based company has also requested that consumers be charged for some of the price hikes the company is facing under new legislation.

Mobach said that as a result of the supply cuts from Russia, consumers were facing a “very large price wave” that led to higher bills.

In an interview with local media, German Economics Minister Robert Habeck warned that the government would not allow the company to go bankrupt and would resort to the “least expensive” option for consumers and the “safer” option for energy supplies to Germany.

Fortum, Uniper’s largest shareholder, said it was in talks with the German government about a rescue plan.

The Finnish group said in a statement that one of the options being considered would be to reorganize Uniper under “German state ownership”.

Source: AP

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