The European Commission today approved the reorientation of SEFE, the state-owned gas trading company, under State aid rules. In order to safeguard the gas supply in Germany, the Federal Government had transferred the troubled gas company Securing Energy for Europe GmbH (SEFE), previously Gazprom Germania, to federal ownership last month. The European Commission has now confirmed these capital measures under State aid rules.
Specifically, the Commission has authorised the Federation to inject €6.3 billion of additional equity into the company by converting part of an existing KfW loan. Today’s decision confirms that the measure is necessary to safeguard energy security in Germany. The Commission has attached competition-related conditions to the approval.
The Federal Ministry for Economic Affairs and Climate Action issued an on 14 November 2022 under the Energy Security of Supply Act making the federal-owned company SEEHG Securing Energy for Europe Holding GmbH the sole shareholder of SEFE. The deadline for legal challenges to the order has now passed. No challenge has been lodged, so SEFE has been nationalised. Today’s approval under State aid rules by the European Commission means that this can now take place.
In order to maintain SEFE’s capacity to operate commercially in the interest of energy security, the Federation will inject an additional €6.3 billion of equity into the company in the coming days.
In accounting terms, this involves converting part of the existing KfW loan of €13.8 billion into equity. The loan is correspondingly reduced to €7.5 billion. The measures are financed from the €200 billion of the reactivated Economic Stabilisation Fund.
This debt-to-equity swap safeguards SEFE’s creditworthiness and thus its capacity to act. The overall package enables SEFE to rebuild its business away from Russian gas.