Energy Fortum provided Uniper with a maximum of EUR 8 billion in financing for electricity price fluctuations

Energy company Fortum says it has provided up to EUR 8 billion in intra-group financing to its German subsidiary Uniper.

With the funding, Uniper is preparing to secure its liquidity as gas and electricity prices are expected to continue to fluctuate during the winter season.

Fortum states in its release that the financing has been provided on normal market terms. The financing arrangement consists of two parts: a shareholder loan and a guarantee from the parent company.

Uniper has so far used some of the funding, Fortum says.

In addition to Fortum’s financing, Uniper has raised the company’s current EUR 1.8 billion revolving credit facility in full and agreed with the German state-owned KfW Bank on a short-term revolving credit facility of up to EUR 2 billion.

Fortum says that strong commodity market volatility in the autumn and early winter and record high gas and electricity prices have increased collateral requirements for European market participants.

“Uniper hedges its asset-related asset positions with forward contracts, for which counterparties often require collateral. As commodity prices rise, the market value of forward contracts decreases, increasing the collateral required from Uniper accordingly, ”says Fortum.

According to Fortum, the collateral will be returned to Uniper when the gas and electricity sales contracts mature or market prices fall.