A historical agreement between Fortum, Rosatom and Gazprom from december 2014 gives the Finnish energy major control over a lion’s share of hydropower capacities in Northwest Russia.The deal signed between the three companies will give Fortum ownership over all of TGC-1’s hydropower assets in Murmansk Oblast, the Republic of Karelia and Leningrad Oblast. In addition, the Finnish company will take over a 15 percent stake in the Fennovoima nuclear power project.
Still negotiations
In return, Gazprom and its subsidiary Gazprom Energy Holding will take over all of TGC-1’s thermal power capacities. The Territorial Generating Company No 1 (TGC-1) is one of the biggest electric power producers in Northwest Russia and has until now been owned by Gazprom (51,8%) and Fortum (29,5%). The swop also includes the inclusion of Rosatom, Russia’s state nuclear power corporation, with a 25 percent stake in a new joint venture with Fortum. Fortum takes the remaining 75 percent of the new company, reports Yle (The finnish Public Media Company). But the TGC-1 restructuring negotiations in Russia are still not concluded, reports Fortum.
Leading Russian Producer
Territorial Generation Company no. 1 (TGC-1 or TGK-1) is the leading producer and supplier of electricity and heat in the North-West of Russia and the 3rd largest territorial generating company in Russia in terms of installed electric capacity. TGC-1 JSC is the leading producer of electricity and heat in the North-West region of Russia and the second largest territorial generating company in Russia in terms of installed capacity. It operates 54 electric generating stations in four regions of Russia: St. Petersburg, Republic of Karelia, Leningrad Oblast, and Murmansk Oblast. Major shareholders are Gazprom Energoholding LLC (51.79 %) and Fortum Power and Heat Oy (29.45%). Fortum to participate in the Fennovoima project with 6.6 per cent share – TGC-1 restructuring negotiations in Russia still not concluded Fortum has decided to participate in the Fennovoima nuclear power project in Finland with 6.6 per cent share and on the same terms andconditions as the other Finnish companies currently participating in the project. Participation will be carried out through Voimaosakeyhtiö SF.
Important Nuclear Projects
Fennovoima is an important project for the Finnish society. At the same time, nuclear power is one of the key areas in Fortum’s strategy and our core competence together with hydro power and combined heat and power production”, says Fortum’s Interim CEO and CFO Timo Karttinen( See the Picture).
-With our participation, Fennovoima project will be able to utilize Fortum’s wide expertise of the nuclear sector and our technical know- how. At the same time Fortum will be able to continue its good long term cooperation with Rosatom and develop further its own expertise along with the project. Our target has not been to build a greenfield site for nuclear power in Finland as we already have two own nuclear power units in Loviisa and Fortum holds a share in Olkiluoto units. Our decision enables, however, Fennovoima project to proceed within the timeline the Finnish government has set to the project, says Mr Karttinen to Nordens Nyheter
Jointly approved Solution
Situation in the Territorial Generating Company TGC-1 restructuring negotiations in Russia remain unchanged. Despite of continued negotiations it has not up till now been possible to find a jointly approved solution. Fortum, Gazprom Energoholding and Rosatom signed as mentioned a protocol to start negotiations on the restructuring process of TGC-1 ownership in Russia in december 2014. Fortum has a 29.5 per cent holding in TGC-1, says Helena Aatinen Senior Vice President, Corporate Communications in Fortum to Nordic News. The TGC-1 owns and operates a fleet of 40 hydro power plants with a total capacity of about 3,000 MW, and hydro power generation accounts for 41 percent (12-13 TWh) of the company’s total electricity generation. In addition, the company owns 14 thermal plants with a total electricity capacity of 4,300 MW and has a total heat capacity of 16,500 MW (29 TWh/a). With the deal, a number of power plants originally built by Finnish companies, some of them located on territories previously belonging to Finland, will again get Finnish ownership. TGK-1 owns a string of hydropower plants in the Kola Peninsula, several of them located in Pechenga, the area which was part of Finland in the mid-war period. The TGK-1 also has generating capacities in the Republic of Karelia, reports Barents Observer.
CO2-free Production
The takeover of the Russian assets will boost Fortum’s hydropower portfolio by 60 percent, the company says in a press release.
-This clearly demonstrates Fortum’s strong commitment to CO2-free production, writes CEO Tapio Kuula in a press release today.
-These transactions strengthen the cooperation between energy sector companies in Finland and Russia, CEO of Rosatom Sergey Kirienko says in the same press release.
The deal might take the steam out of an ongoing corporate dispute between Fortum and TGC-1 co-owner Gazprom Energy Holding. According to newspaper Kommersant, the Finnish company has strongly protested against the recent selling of one of TGC’s hydropower plants in Murmansk Oblast to industrial company Rusal and has consequently blocked a number of other corporate decisions. The 15 percent ownership stake in the Fennovoima nuclear power project will give Fortum a key role in the development of the controversial project. As previously reported, the projected NPP is based on Russian technology and is owned 34 percent by Rosatom.
