Fortum ready to take minority stake in Fennovoima nuclear project

02 December 2014

Fortum would be ready to participate with a minority - maximum 15% - stake in the Fennovoima nuclear power plant project, provided that Fortum obtains a 75% or more ownership in the hydro assets of Russian territorial generating company TGC-1, the Finnish power producer said in a stock exchange release today.

Fortum was referring to the Hanhikivi 1 construction project in Pyhäjoki in northern Finland. The company generates, distributes and sells electricity and heat, and offers related expert services. Its operations focus on the Nordic and Baltic countries, Russia and Poland.

Espoo-headquartered Fortum said it would participate in the Hanhikivi 1 project on the same terms and conditions as the other Finnish companies currently participating in it.

Finland's Voimaosakeyhtiö SF said last week it had increased its share in the project to 55.5% from 50.2%. The plant is scheduled to start generating electricity by 2024.

The government has said that a construction licence for the project will only be issued once Finnish ownership is more than 60%, which must be achieved before the end of June 2015.

The project is owned by Fennovoima, of which Voimaosakeyhtiö has a 66% share. The remaining 34% of Fennovoima is held by RAOS Voima Oy, a Finnish subsidiary set up last year by Russia's Rosatom specifically to hold a stake in the company.

Founded in 2007, Voimaosakeyhtiö now includes more than 40 companies. Two of them - Sallila Energia and Keravan Energia - decided to increase their stake in the plant, according to Fennovoima, thus increasing Voimaosakeyhtiö’s stake to 55.5%. Just over 10% in the project remains unallocated.

Involvement in Fennovoima's nuclear project would be of mutual benefit, Tapio Kuula, president and CEO of Fortum, said in today's statement. "While Fortum's participation and competencies are extremely valuable for the project, it will also provide Fortum with possibilities to grow in the area of nuclear expert services."

Fortum issued the release to announce it had signed a protocol with Gazprom Energoholding to start a restructuring process of their ownership of TGC-1, which owns and operates hydro power and thermal power plants in northwest Russia, as well as heat distribution networks in St Petersburg. Gazprom Energoholding owns 51.8% of TGC-1 shares and Fortum owns 29.5%.

As part of the restructuring, Fortum will establish a joint venture together with Rosatom, the Russian state nuclear corporation, to own the hydro assets of TGC-1, while Gazprom Energoholding will continue with the heat and thermal power businesses of TGC-1. By utilising its present stake in TGC-1, Fortum and Rosatom would have, respectively, a 75-plus-percent and a 25-minus-percent minority holding in the new hydro power company.

Fortum, Gazprom Energoholding and Rosatom have signed a protocol to start the restructuring process. The parties shall agree on the detailed structure, practical arrangements and final commercial terms of the transactions. The new company will be consolidated to Fortum Group as a subsidiary.

"These transactions strengthen the cooperation between energy sector companies in Finland and Russia and also with our long-term partner, Fortum," Sergey Kirienko, Rosatom director general, said in the Fortum statement.
Kuula added that restructuring of TGC-1 assets will increase Fortum's total hydro power generation capacity by 60% to 34 TWhe.

Fortum has 50 years of experience of working in Russia and with Russian partners and so increasing its volume of hydro power in Russia is "a natural step", Kuula said. Fortum produces and sells electricity and heat in the developed industrial areas of the Urals and in the oil and gas producing regions of Western Siberia. Electricity is sold on the wholesale market and heat on the local markets.

Researched and written
by World Nuclear News