European Commission: Commission approves €225.6 million German measure to support energy company SEFE GmbH

The European Commission has approved a €225.6 million German aid measure to support SEFE Securing Energy for Europe GmbH (‘SEFE GmbH’), previously Gazprom Germania GmbH, currently placed under the trusteeship of Germany. The measure will allow the German State to take the 100% ownership of SEFE GmbH replacing Gazprom Export LCC, in order to safeguard the security of gas supply to the German economy.

The measure was approved under Article 107(3)(b) of the Treaty on the Functioning of the European Union (‘TFEU’), recognising that the EU economy is experiencing a serious disturbance, by following the principles set out in the State aid Temporary Crisis Framework, adopted by the Commission on 23 March 2022 and amended on 20 July 2022 and on 28 October 2022, and the principles of the 2014 Rescue and Restructuring Guidelines.

The German measure

Germany notified to the Commission under Article 107(3)(b) TFEU a €225.6 million measure to support SEFE GmbH. The measure will allow the German State to take the 100% ownership of SEFE GmbH replacing Gazprom Export LCC, a majority State-owned Russian company.

The measure follows the principles set out in the State aid Temporary Crisis Framework, according to which companies severely affected by the current crisis, in particular energy companies, may receive solvency support when private sources alone are not sufficient. It also follows the principles of the 2014 Rescue and Restructuring Guidelines.

SEFE GmbH, a systemic energy company in Germany, previously named Gazprom Germania GmbH, has a 14% share in the gas supplies market in Germany and is active also in other Member States. In addition, it owns and operates 28% of the gas storage serving the German market and owns gas pipelines in Germany and other Member States.

Following Russia’s aggression against Ukraine and the subsequent disruption of gas deliveries by Gazprom, SEFE GmbH has incurred serious losses.

On 4 April 2022, due to the attempted transfer of shares and liquidation by its Russian shareholder, SEFE GmbH was placed under the trusteeship of the Federal Republic of Germany in order to be able to continue doing business and ensure security of supply. With the establishment of the trusteeship, the company came under the control of the Federal Republic of Germany until 15 December 2022. To continue business relations with market participants and thus to be able to keep serving its customers, Germany intends to assume full ownership of the company.

Under the planned measure, the existing registered capital of €225.6 million will be set to zero, which will de facto end the ownership of the present Russian shareholder. SEFE GmbH will then issue new ordinary shares to the same nominal amount. The present measure will therefore not change the equity of SEFE GmbH. The new shares will be subscribed by Germany.

The Commission’s assessment

The Commission found that the German measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU.

In its assessment, the Commission has also followed the principles set out in the State aid Temporary Crisis Framework and in the 2014 Rescue and Restructuring Guidelines.

The approval is subject to Germany’s compliance to conditions to limit potential distortions of competition, namely an acquisition ban and a bonus ban.

Germany has further committed to notify to the Commission a long-term viability assessment for SEFE GmbH and its subsidiaries covering the notified measure and, if relevant, any future planned recapitalisation measure.

On this basis, the Commission approved the aid measure under EU State aid rules.