The ailing utility Uniper has submitted an application to the federal government for stabilization measures.

The proposal is aimed at cost sharing, an increase in the credit line through the state development bank KfW and a possible federal investment in Uniper.

Uniper is by far Germany's largest gas importer and got into difficulties in the course of the gas crisis.

Due to the throttling of Russian gas supplies, the company has to buy gas at more expensive prices and is reportedly making millions in losses in order to meet its delivery obligations to public utilities, among others.

Accordingly, Uniper also proposes being able to pass on price increases to customers.

The measures were aimed at ending the current accumulation of significant losses and covering Uniper's liquidity needs.

The listed Uniper SE has its headquarters in Düsseldorf and is majority owned by the Finnish energy supplier Fortum, whose largest shareholder is the Finnish state.

Fortum explained that a reorganization of Uniper's business areas was being discussed with the federal government "in order to bundle the system-critical German business activities and secure them with the federal government".

Fortum's proposal provides for a restructuring of Uniper - with the aim of establishing a security of supply company owned by the federal government.

Gas prices will rise

The Bundestag and Bundesrat had previously passed legal changes to facilitate possible federal aid for ailing energy companies such as Uniper.

As soon as the law was passed by the Federal Council on Friday, Uniper announced in a mandatory notification that it would apply for state aid.

As Uniper announced, the proposal submitted with the application for state stabilization measures is initially based on a “fair distribution of costs”.

The group refers to the Energy Security Act.

This provides, for example, for price increases to be passed on to all gas customers.

In addition, the proposal provides for additional outside capital by increasing a KfW credit line that has not yet been drawn.

The credit line is two billion euros.

The measures should also protect Uniper's investment grade.

With the reform of the Energy Security Act (Ensig), which the Federal Council approved on Friday, the federal government wants to react to a shortage of gas supplies.

In this way, regulations can be put into effect to support importers such as Uniper, who have been hit by the Corona crisis, up to and including state entry, based on the model of the Lufthansa rescue.

In addition to Uniper, the industry also says about the Leipzig gas trader LNG that it could possibly apply for help.

The law also contains options for importers to pass on their additional costs more quickly and more evenly.

At the same time, the Federal Council passed a second package intended to accelerate the expansion of green electricity, also to ensure security of supply.

Federal Minister of Economics Robert Habeck (Greens) spoke of the biggest project in decades: "It is a package of laws that will change this country." But at the same time one full of unreasonable demands.

Habekck warned that in the second half of the year the consensus in the country would be particularly tested in response to the Russian attack on energy prices.

The instruments that the government could use with the Energy Security Act would have far-reaching consequences.

"It is a sharp sword, to be drawn with care.

But we have to sharpen it.”

Coal power to replace gas

As one of the first instruments, Habeck could now approve the use of old coal-fired power plants in order to save gas.

He has announced a ministerial regulation for this as soon as the Federal President signs the law in the next few days.

This should help to prepare for the winter in particular, when burning gas to generate electricity will be replaced.

The federal government is keeping an eye on the scheduled closure of the central gas pipeline Nord Stream 1 for regular maintenance from Monday. It should only last ten days.

Habeck and the industry also consider a longer shutdown by Russia for political reasons to be possible.

Less than half of the gas ordered already flows through the pipeline, for which Russia cites technical reasons.

The Federal Association of the Energy Industry (BDEW) praised the regulations as well as the possibility of passing on the purchasing costs to customers more quickly.

Since Russia is supplying less gas than ordered, importers have to buy the missing quantities on the market at short notice, which is expensive.

However, you cannot pass on the additional costs in existing contracts, which the law should now make possible with an even and stretched distribution to all customers.

"However, it is important that politicians keep an eye on the fact that low-income households in particular are not overburdened when using this instrument," said BDEW boss Kerstin Andreae.

According to the law, state support for importers such as Uniper should be considered beforehand,

The President of the Federation of German Industries, Siegfried Russwurm, proposed a financial incentive for companies to sell excess gas.

"Politics and business must use the summer months to save gas and fill the storage tanks before the upcoming heating season," he said.

"Otherwise there is a risk of a serious gas shortage with production slumps in the industry."