Employee representatives of the nationalized energy group Uniper have warned the German government against breaking up Germany's largest gas company and rejected any thoughts in this direction.

"Uniper must not be split up," Head of the Works Council Harald Seegatz told the Reuters news agency on Friday. "Otherwise, the Group as a pillar of the energy supply in Germany would be jeopardized, as many internal synergies would be destroyed." Seegatz was referring to a paper by the management consultancy Boston Consulting Group (BCG), in which, among other things, the sale of parts of Uniper on the capital market and a merger with the nationalized gas trader Sefe are discussed. The "Rheinische Post" had also reported on this.

Both companies had posted losses in the billions due to the Russian gas supply freeze. Uniper has been required by the EU Commission to divest various businesses in order to be rescued by the state. "The uncertainty among employees is growing. We have already made many redundancies and this discussion is stirring up even more fears for the future among employees," criticized Seegatz.

Uniper described the document submitted to the Reuters news agency as a discussion paper. No decisions had been made. BCG declined to comment. None was initially available from Sefe or the Federal Ministry of Finance.

UNIPER AND SEFE COULD BE NATIONAL HYDROGEN PLAYERS

The letter from December 2022 is about the Orca project, in which proposals for action for the future of Uniper and Sefe are presented. The proposals were based on initial discussions between State Secretaries Patrick Graichen and Udo Philipp with the heads of the two companies and Boston Consulting. One proposal is a timely and value-maximizing sale of the remaining healthy parts of Uniper and/or Sefe on the capital market. "This applies in particular to Uniper's electricity business, as this does not require any long-term state participation," the paper states.

"The various businesses, such as the electricity business and gas trading, have always complemented each other well," emphasized union representative Seegatz. The income from all parts of the business would be needed to build up future businesses such as hydrogen or renewable energies. Uniper operates coal and gas-fired power plants in Germany and other European countries and nuclear power plants in Sweden. In Germany alone, more than 1700 people are employed in power generation. The power generation business in Russia has been up for sale for some time. "We will bring the issues surrounding the future of our company to the Supervisory Board meeting in February," announced Seegatz. He is Vice-Chairman of the Supervisory Board.

Boston Consulting also describes the possibility of a merger between Uniper and Sefe. This would have the advantage of synergies through the pooling of competencies. The disadvantage would be high antitrust hurdles. The "establishment of a national hydrogen player" is also conceivable. This could build on relevant parts of the business of Uniper and/or Sefe. In the future, other market players could contribute relevant infrastructure and skills in exchange for a stake in the company. "This would ensure broad market acceptance and minimize the risk of distortion of competition and possible EU state aid concerns."

(Report by Tom Käckenhoff, Christoph Steitz, Holger Hansen; edited by Olaf Brenner. If you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).