EnBW compensation deal for VNG gas division not to include government stake

By Christoph Steitz and Tom Käckenhoff

FRANKFURT/DUESSELDORF (Reuters) -EnBW and Berlin are finalising a deal to compensate the utility's VNG unit for billions of euros in losses caused by the halt of Russian gas supplies, its CFO said, ruling out the government taking an equity stake as part of the agreement.

Thomas Kusterer, speaking to reporters after presenting EnBW's nine-month results, said a solution was likely within days, not weeks, and that the company expected a negative impact of 1.2 billion euros ($1.23 billion) in 2022 as a result.

VNG, of which EnBW owns 74%, is one of Germany's biggest gas importers. Following the halt of Russian supplies, it had to buy replacement volumes at much higher prices elsewhere.

The crisis led larger rival Uniper to seek a deal with the German government for full nationalisation.

When asked whether partial nationalisation was likely for VNG, Kusterer said: "That is not our assumption at the moment. And the indications we're seeing in the talks we are having and in the contractual agreements we are in the process of concluding also support this statement."

Kusterer said the government would not take a stake in VNG as part of the deal, adding the solution would look different. "It's about compensating VNG," he said.

VNG, which applied in September for state aid, last month reached a settlement with SEFE, formerly known as Gazprom Germania, effectively ridding it of any losses related to a 65 terawatt hour (TWh) contract that will expire at the end of this year.

That still leaves VNG exposed to a 35 TWh contract with Gazprom, which is incurring billions of euros of losses and was a factor behind EnBW's decision to cut its 2022 outlook.

EnBW expects adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) to fall by 2%-9% to 2.7 billion euros to 2.9 billion euros ($2.75-$2.95 billion). It had previously expected a rise of 2%-7%.

The lowered outlook was also due to uncertainty around outstanding details of a planned windfall tax in Germany that will skim off profits at companies that have benefited from this year's surge in wholesale power and gas prices, EnBW said.

($1 = 0.9742 euros)

(Reporting by Christoph Steitz and Tom Kaeckenhoff; Editing by Kirsten Donovan, Miranda Murray, Barbara Lewis and David Evans)