The signals are no longer just sporadic. In the emergence of the crisis in general and of the energy crisis in particular, the state in European countries is once again taking over the reins of the economy, rewinding the reel that started in the 90s when the dominant mantra praised the privatization of every state-owned company. The concepts of nationalization e state aid have been officially cleared.
Edf is back under the control of the Elysium, for financial but also political reasons
The prime minister Elisabeth Borne in his general policy speech before Parliament on Wednesday he announced the French government's intention to return to having 100% control of the energy giant EDF, motivating the action with the fact that this will allow "EDF to strengthen its ability to carry out ambitious and indispensable projects for our energy future as soon as possible". The French state already controls Edf with an 84 percent share, while 1 percent is owned by employees and 15 percent on the market.
Edf, which in turn controls the Italian company Edison, is not sailing in good waters: it has to deal with delays and budget overruns for i new nuclear plants in France and Great Britainas well as corrosion problems in some of its aging reactors. Half of its reactors in France are currently out of service.
Furthermore, the French energy giant has also been hurt by government regulations that force it to sell energy to competitors at discounted prices. The company estimated that production losses will reduce profits by €18,5 billion and discounted electricity sales will cost it €10,2 billion. His debt it is expected to increase by 40% this year, exceeding 61 billion euros.
Edf stock, which on Wednesday had jumped by 5% to 9 euros, on Thursday reversed to 8,97 (-0,13%).
Scholz's government helps Uniper for 9 billion and enters its capital
Another clue comes from Germany. It is these days the news that Chancellor Olaf Scholz is preparing to public bailout of Uniper, one of the largest importers of gas from Russia: 9 billion in state aid after the company got into trouble because for weeks it has received only 40% of the gas expected from Gazprom, the Kremlin company that owns the fields and pipelines to Europe. The German government could take over part of the capital (we are talking about 25%) and bear the extra costs for the final consumers.
More generally, the executive led by Scholz is evaluating the possibility of presenting a law in the next few days that would allow it to take stakes in companies heavily penalized by the soaring cost of imported gas, through an injection of capital. In the plans of the executive, not even the possibility of placing the energy companies under the roof is excluded trusteeship in case the country's energy security is threatened.
Uniper was listed on Thursday at €10,26, up 3,12%. On Wednesday it had done +9% after -28% during the week.
A historic change of course compared to the concepts of liberalization and free market of the 90s
Thus disavowing them free market rules which in the past seemed unshakeable, France and Germany have independently decided on public rescue plans and nationalisations. At the basis of this change of strategy there are many reasons, in some cases financial, of course, but certainly there are also those related to the need to deal with the emergency.
After all, the words of the President of the European Commission, Ursula Von der Leyen, leave no doubts about the state of emergency: “We must prepare for further gas supply disruptions, even a complete cut off from Russia,” announcing “an emergency plan” to deal with the possible stop supplies from Moscow.
“The choice of the Elysee to re-nationalise EDF is not only dictated by financial issues. It is a precise political will, because President Emmanuel Macron is convinced that the country's energy independence still passes from state nuclear power“, says an observer of the sector, “after all, the reasoning that Berlin is making is that if the energy companies were nationalized, they would pass under the control of the German authorities, guaranteeing the continuity of supplies".
European gas prices have reached their highest levels for almost 4 months above 170 euro/mWh.
Could something similar happen in Italy? No. Or maybe Ni. Here is the situation
If one wanted to draw a parallel between the story of the French Edf and the Italian one Enel, then we're not there. If in order to have total control of the French company the Elysee will have to buy a share of around 15%, in order to have control of Enel the Italian state would have to buy almost 80% on the market since it holds only 23,6%. A road too impervious.
But if there seems to be no nationalization in the true sense of the word, the Italian government has found a way to use companies (of which it continues to be the controlling shareholder) to deal with the impending emergency.
It is primarily the case of Eni: thanks to its role as the main oil & gas operator in Africa, the company has paved the way for government agreements to increase gas imports in view of next winter. The most important from Algeria, but supplies will then come from Congo and Angola. And later also from Mozambique, where President Sergio Mattarella has just been on an official visit and where the premier should go in September.
The group is moving in the same way Snam, which manages the national gas pipeline network. The company announced that it has purchased the second regasifier "floating" which will allow an increase in imports of LNG, the liquefied gas that travels by ship and will partially replace the Russian one. And he did so on the recommendation of the government, “which has also given indications to increase the methane extractions on national soil and also wants to give the green light – but for now it is blocked by majority vetoes – alle augers in the upper Adriatic,” says a source in the sector.
Another game that has a strong flavor of state control is played with the gse: the public body that supervises energy services has been appointed (with the decree law of 1/3/2022 urgent measures for the containment of energy costs) to buy the remaining portion of gas needed to complete the storage filling, the strategic reserves for the winter. It will do so with a tender aimed at those who manage national methane deposits at "reasonable prices" established by decree. A sort of roof, which will then allow the GSE to resell it to energy-intensive companies and SMEs.
Enel shares 5,24 euros on Thursday, up 1,35% after the 3% jump on Wednesday in Edf's wake.
Eyes to the renewal of the Stability Pact at the end of the year which will have to take into account the new course
Certainly the change of course at the level of individual countries is also taking place with a pass of Europe, given that the concept of "state aid", so opposed in recent years, is easing.
The theme is doubly linked to that of the revision of the Stability pact, suspended for now, due to a pandemic, until the end of this year.
The European Commissioner for the Economy Paolo Gentiloni he said that from September onwards a new proposal on the Stability Pact will arrive but "it doesn't seem that there can be any more that confrontation that was noted in past years" between decidedly intransigent countries and those who hoped for a more flexible situation, even regarding state aid and the consequent exceeding of the limits on the increase in public debt and deficits. "The differences have disappeared and an agreement on a new formulation of the Stability Pact becomes possible: which would be a further sign of unity that would also be good for the markets," he told Radio24.
