Federal government – The federal government backs Siemens Energy with billions in guarantees – Politics

Posted On: November 14, 2023

Berlin/Munich (dpa) – The federal government provides a guarantee of 7.5 billion euros to Siemens Energy. This is part of the required guarantees totaling 15 billion euros, agreed among others with private banks, as the Federal Ministry of Economy announced on Tuesday. This was preceded by weeks of negotiations.

In particular, private banks provided guarantees to Siemens Energy totaling 12 billion euros, some of which were secured by federal government guarantees. The company is expected to raise another 3 billion in negotiations with another party it initially did not name. The federal government is only willing to provide guarantees if other parties involved also contribute. Additionally, the agreement includes what the federal government says is a “customary” prohibition on dividends and bonuses for the board of directors while the guarantees are in use.

“We are pleased with the federal government’s clear support for Siemens Energy and related commitment to the rapid implementation of these projects to ensure a successful energy transition,” an Energy spokesperson said. He initially would not comment on further details and referred to a balance sheet press conference on Wednesday for the fiscal year ending at the end of September.

The mother was also in the boat

Former parent company Siemens is also on board. According to the ministry, it obtained one billion in guarantees from banks through what it called the first loss stage. Therefore, it will be used especially in case of damage. Siemens Energy is expected to receive about 2 billion more through the sale of shares in its joint venture with Siemens. This may be Siemens India. In late October, the company said there were related discussions. Energy previously controlled 24 percent. Siemens spun off its power generation business in 2020 and listed it on the stock exchange as Siemens Energy.

Siemens itself did not comment in more detail. This will be done “as soon as all necessary approvals have been received and the contract has been implemented,” a spokesperson said. He stressed: “From the start, we have been committed to finding the best solution for all parties concerned.”

Bailouts are not uncommon

In late October it became known that Siemens Energy was in talks with the federal government regarding state guarantees. Guarantees like this are common in long-term transactions; for example, protecting customer down payments. Because Energi has a very high order backlog, namely more than 100 billion euros, the underwriting requirements are also high.

Siemens Energy has suffered for years from difficulties at its wind power subsidiary, Siemens Gamesa, which repeatedly caused problems and billions of dollars in losses. The large burden of quality problems has recently been discovered. Other business fields such as conventional power generation technology or electricity transmission are running well, but are unable to offset the load from wind power. Over the past year, Siemens Energy recently estimated an after-tax loss of around 4.5 billion euros – after a loss of 712 million euros in the previous year. The figures will be presented on Wednesday morning.

Economy Minister Robert Habeck (Green Party) also stressed on Tuesday that, apart from problems in the wind power sector, Siemens Energy is in perfect health and has a complete order book.