Fortum says ‘investigating’ information of Russian asset seizure

HELSINKI, April 26 (Reuters) – The Kremlin mentioned on Wednesday it may seize extra Western belongings in retaliation for international strikes in opposition to Russian corporations, after taking non permanent management of belongings belonging to 2 European state-owned utilities.

President Vladimir Putin late on Tuesday signed a decree inserting the Russian belongings of Finland’s Fortum (FORTUM.HE) and Germany’s Uniper (UN01.DE), which each function energy crops in Russia, beneath Moscow’s management. Russia made clear that the transfer may very well be reversed.

Uniper mentioned it was reviewing the motion in opposition to its Russian division Unipro (UPRO.MM). Fortum mentioned it was investigating and had realized from its Russian subsidiary that the corporate’s CEO had been changed and the unit put beneath non permanent asset administration.

A spokesperson for Germany’s Finance Ministry, which oversees the federal government’s possession of Uniper, mentioned Berlin wanted to evaluate the concrete implications of Russia’s decree.

Finland’s outgoing minister answerable for state holdings Tytti Tuppurainen tweeted that the data was worrying and that the state, as Fortum’s majority proprietor, would comply with the matter carefully.

Moscow has reacted angrily to stories that Group of Seven nations are contemplating a near-total ban on exports to Russia, whereas many have referred to as for more durable sanctions to restrict Russia’s capacity to combat in Ukraine.

In the meantime, the European Union is taking a look at utilizing frozen Russian belongings to rebuild Ukraine. Germany nationalised a former division of Russian vitality big Gazprom (GAZP.MM) final yr.

“The decree adopted is a response to the aggressive actions of unfriendly international locations,” Kremlin spokesman Dmitry Peskov mentioned. “This initiative mirrors the perspective of Western governments in the direction of international belongings of Russian corporations.”

Putin’s decree “doesn’t take care of property points and doesn’t deprive the homeowners of their belongings. As a result of exterior administration is non permanent and solely implies that the unique proprietor not has the correct to make administration selections,” Peskov continued.

“The primary objective of the decree is to kind a compensation fund for the doable utility of reciprocal measures in response to the unlawful expropriation of Russian belongings overseas.”

LACK OF CLARITY

Uniper owns 83.73% of Unipro, which operates 5 energy crops with a complete capability of over 11 gigawatts in Russia and about 4,300 workers.

Fortum’s Russia division has seven thermal energy crops within the Ural area and Western Siberia, and a portfolio of wind and photo voltaic crops in Russia along with native enterprise companions. The guide worth of these belongings was 1.7 billion euros ($1.87 billion) on the finish of 2022.

Fortum is majority-owned by Finland, which joined the NATO navy alliance early this month in a transfer Moscow referred to as a harmful mistake.

The Finnish international ministry wouldn’t instantly touch upon how Russia’s determination would possibly have an effect on relations between the 2 international locations.

“Fortum’s present understanding is that the brand new decree doesn’t have an effect on the title (registered possession) of the belongings and firms in Russia,” the corporate mentioned in an announcement.

“Nevertheless, it stays unclear how this impacts e.g. Fortum’s Russian operations or the continued divestment course of,” it added.

Each corporations have been attempting to exit Russia. In February, Uniper valued its Unipro stake at a symbolic 1 euro to replicate the chance {that a} deal wouldn’t happen.

Peskov mentioned exterior administration was being launched for belongings of “paramount significance to the secure functioning of the Russian vitality sector” and that the checklist may very well be expanded.

The 2 entities’ shares had been positioned within the non permanent management of Rosimushchestvo, the federal authorities property company.

New chief executives had been put in, Vasily Nikonov at Unipro and Vyacheslav Kozhevnikov at Fortum in Russia, with each males transferring from Russian oil corporations at Rosimushchestvo’s behest.

State-owned Russian financial institution VTB (VTBR.MM) this week mentioned Russia ought to consider taking over and managing the belongings of international corporations comparable to Fortum, solely returning them when sanctions had been lifted. Fortum had beforehand flagged expropriation threat.

Asset gross sales by traders from “unfriendly” international locations – as Moscow phrases those who imposed sanctions in opposition to Russia – require approval from a authorities fee and, in some circumstances, the president.

Moscow’s transfer creates a brand new headache for corporations attempting to extricate themselves from Russia. Corporations with stakes in vitality tasks and banks already face extra stringent exit pathways.

Wintershall Dea (BASFn.DE), [RIC:RIC:WINT.UL], which nonetheless holds stakes in a variety of Russian joint ventures with Gazprom, referred to as Moscow’s insurance policies “unpredictable” and “unreliable”.

($1 = 0.9094 euros)

Reporting by Essi Lehto and Anna Ringstrom, enhancing by Terje Solsvik

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