BERLIN, Germany – German utility group Uniper on Monday, July 18, applied to extend its 2-billion-euro ($2.03 billion) credit line with state-owned lender KfW after drawing down the full amount in response to supply shortfalls of Russian gas.

Uniper said it also proposed to activate a legal mechanism that would allow it to pass on increased procurement costs to customers, and the state to take a “relevant stake” in it.

Germany’s biggest gas importer became the subject of urgent consultations between Germany and Finland after it asked Berlin for a bailout earlier this month to tackle financial problems caused by gas scarcity and skyrocketing prices.

A German economy ministry spokesperson said on Monday the government was working with Uniper and its Finnish parent company Fortum to find ways to assist. State-dominated Fortum holds a 78% stake in Uniper.

According to Uniper, it is not yet clear when talks with the government can be concluded.

A decision on how a potential bailout could look is expected to be made as soon as this week, a source familiar with the matter told Reuters.

Potential scenarios include the German state taking a direct minority stake in Uniper to provide fresh equity or ringfencing Uniper’s German gas business and handing it to Berlin, people familiar with the negotiations said.

The embattled utility has been withdrawing gas from its own stores since last week, it said. Up to Monday, over two terawatt hours (TWh) had been withdrawn.

“Uniper is currently paying the price for the supply shortfalls in German gas supply due to curtailed deliveries from Russia,” chief executive Klaus-Dieter Maubach said.

“Only if the supply cuts from Russia stop or if the German government uses the instruments of the EnSiG will we be able to prevent a chain reaction in the gas supply chain in the future as well.”

The EnSiG, or Energy Security Act, gives the government additional tools to help struggling utilities.

Germany has accused Russia of strangling the flow of gas to Europe through spurious pretexts in revenge for sanctions over the Ukraine war. Russia has denied doing so, and said it was a reliable energy supplier that honors its contracts.

Uniper said it could not say how long the KfW credit facility would last, adding this would depend on market developments. – Rappler.com

$1 = 0.9848 euros