GERMANY is reportedly in advanced talks to nationalise three large gas importers in a bid to prevent the collapse of its energy market.
Bloomberg reports that state ownership of firms Uniper, VNG AG and Securing Energy for Europe GmbH (SEFE) is the main solution on the table as the country tries to get to grips with its energy supplies ahead of winter.
Governments across Europe have been racing to prop up power suppliers amid bringing in further sanctions against Russia over its invasion of Ukraine.
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Moscow has threatened to turn off the taps and reduce gas flows to Europe, sending prices soaring and the prospect of energy rationing is on the table.
It comes after Germany took control of a major Russian-owned oil refinery on Friday in a bid to meet its European Union commitment to eliminate Russian oil imports by the end of the year.
The exact specifics of the plans to take over the three gas firms have not been revealed, but a conclusion to talks is expected in the coming days, according to Bloomberg's source.
Moscow's squeeze on supplies to Europe has already prompted a series of government bailouts and recuse loans.
According to Uniper's CEO, the firm is having to source alternative supplies and is racking up losses of as much as 100 million euros (£87.5m) due to Russia cutting off the main pipeline to Germany.
The three companies which could be taken over are central to Germany's energy infrastructure and coordinate gas supplies from across the world to run factories, heat homes and keep European power stations online.
Fortum, Uniper's largest shareholder (78% stake) said it couldn't comment while negotiations are under way. Spokespeople for the German economy ministry, Uniper, and VNG declined to comment, while SEFE has not responded to the request from Bloomberg.
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Asked about nationalisation plans, German economy minister Robert Habeck said: “Things are complex, we are working it through very carefully.”
The German government has already agreed to take a 30% stake in Uniper, but Fortum, which has already granted loans to its unit, said earlier this year it didn't want to keep extending credit.
VNG submitted an application for state aid last week. They supply gas to around 400 municipal utilities and industrial operators, and say the extra cost to replace Russian flows to fulfil its contracts is expected to soar to 1 billion euros (£874.6m), according to parent company EnBW.
When it comes to SEFE, there are concerns that a takeover could lead to funds being channelled to Moscow.
German officials passed a law in July which would allow the government to take stake in companies in its trusteeship - against the will of their owner.
This opened up the possibility of nationalising SEFE - which has been in trusteeship since April - but its owner is an unclear Russian entity called Joint Stock Company Palmary. But, the law may require the German government to provide compensation to the former owner.
On Friday, the German government took control of a unit of Russian oil firm Rosneft and said it was putting it under the trusteeship of an industry regulator while taking over the running of its site in Schwedt, in northeastern Germany, which supplies 90% of Berlin's fuel.
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"With the trusteeship, the threat to the security of energy supply is countered and an essential foundation stone is set for the preservation and future of the Schwedt site," the economy ministry said in a statement.
The Financial Times reported earlier this week that Germany had repurposed a Covid-19 fund to bail out energy companies amid concerns that soaring gas prices could trigger a wave of insolvencies across the sector.
KfW, Germany's state development bank, will be able to deploy 67 billion euros (£58.6bn) in loan guarantees and liquidity assistance for energy firms.
According to officials, this will draw from funds originally earmarked to assist companies hit by the pandemic.
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