German gas supplier to get government bailout
September 9, 2022
The German firm VNG, one of the country's biggest importers of Russian natural gas, will receive state support, Economy Minister Robert Habeck said in Brussels on Friday.
VNG is Germany's third-largest gas importer and storage operator. In a statement, the firm said it had requested the government support in order to "avoid further damage to VNG and preserve the VNG group's ability to act."
"Until the start of the Russian war of aggression, VNG was a company in good health," the energy firm added.
In the wake of its invasion of Ukraine, Russia has slowly reduced its supplies of gas to the European Union, which has caused fuel prices to soar.
Major reductions in Russian gas supplies have forced VNG to buy gas at far higher prices on the market to fulfill its supply contracts. This put the company under stress, it said in the statement.
"We are on a very, very good path, and this will be resolved soon," Habeck told reporters after confirming that VNG would receive the funds it requested.
Not Germany's first energy bailout
VNG is the latest German energy company that has required government assistance as a result of the energy crisis triggered by the war in Ukraine.
In July, Chancellor Olaf Scholz confirmed that wholesale gas and electricity importer Uniper would also be rescued, as it was threatened with bankruptcy, with the German government taking a 30% stake in the firm.
VNG is a major gas supplier in Germany, serving about 400 municipal utilities and industrial operators. According to its parent company EnBW, the supplier met about 20% of German gas demand last year, most of it in the eastern part of the country.
Germany is not the only country helping its struggling domestic energy suppliers. Finland and Sweden have already allocated billions of dollars in liquidity guarantees to power companies, seeking to help keep the firms afloat.
jcg/msh (AFP, dpa, AP)
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