Finland’s biggest energy company, Fortum, said on Tuesday that it will take a loss of nearly one billion euros related to the cancelled Nord Stream 2 pipeline project.
Its German subsidiary Uniper has an outstanding loan to the project company that totals 987 million euros including accrued interest. Fortum said it will write down its receivables and forfeit expected interest income of some 100 million euros annually.
The majority state-owned Fortum also said it aims to sell off its Uniper power plants in Russia.
Uniper shares leaped by more than nine percent and Fortum’s by almost seven percent after the parent company signalled its retreat from the Russian market and wrote down its exposure to the pipeline. The two issues have raised investor concern since Russia’s attack on Ukraine, and Germany’s subsequent decision to pull the plug on the pipeline, which was intended to transport Russian fossil gas to continental Europe.
Uniper shares had lost more than half their value since the beginning of this year.
Fortum said that Uniper has been preparing for the possible sale of its separately listed Russian subsidiary Unipro since the end of last year, and that this process will be resumed as soon as possible.
Uniper still buying Russian coal
Unipro has five power plants in Russia with a combined production capacity of more than 11 gigawatts and 4,300 employees. Altogether Uniper and Fortum own a dozen power plants in Russia, mostly gas-powered.
Uniper has halted all new investments in Russia and fund transfers to Unipro.
The German firm said it will not extend or begin new coal or gas procurement contracts with Russian suppliers. However, Uniper “will continue with the existing, long-term gas import contracts from Russia as they play an important role in securing heating for German households and gas for industrial processes in Europe,” Fortum VP Ingela Ulfves said in a statement on Tuesday.
Fortum, which is nearly 51 percent owned by the Finnish state, is by far the country’s largest energy company. Last Thursday, it said had stopped all new investment projects in Russia.
Fortum’s operations in Russia, including the Nord Stream investment, were estimated to be worth some 5.5 billion euros. Last year, Russian operations accounted for about one-fifth of the group’s total profit.
Fortum also owns 34 percent of the planned Fennovoima nuclear power plant in western Finland, which was to be built by a Russian state firm, with key equipment to be manufactured in eastern Ukraine.
Two days after the invasion, Minister for Economic Affairs Mika Lintilä (Cen) indicated that the project would be put on hold indefinitely.
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