Fortum – formerly the biggest renewable energy player in Russia – closed the book on its operations in the country after they were seized by Vladimir Putin’s government and put the cost of its “Russian journey” at €2bn ($2.2bn).
The Finnish state utility said late-April moves by the Russian authorities to take control of its PAO Fortum subsidiary and its assets “mark a point of no return for Fortum, and de facto loss of control of PAO Fortum triggers a full deconsolidation and impairments of the company’s Russian assets”.
The seizure by presidential decree on grounds of securing energy security is “just a guise”, said Fortum, which added that since last year’s invasion of Ukraine “we have consistently sought an exit from the Russian market… and applied for permission to sell the operations to both Russian and international buyers without success”.
Fortum was before the invasion the largest player in Russia’s renewables market, with a portfolio of about 3.4GW of wind and solar farms and development projects, either stand-alone or together with its joint ventures, just part of its sprawling energy sector interests in the country.
The company said it would now deconsolidate and fully write down its Russian assets in the second quarter, when it will “close our books on our operations in Russia for good”.
Fortum said that the net cost of its Russian investments up to 2022 minus earnings received comes to about €2bn. “This can be considered as the net cash loss of our Russian journey,” said Fortum CEO Markus Rauramo.
Fortum has complained to Russia about the seizure, which it labelled “a crude violation of international law”.
PAO Fortum had already shown signs of going rogue, with the parent company forced to clarify in early April that its Russian subsidiary acted “against explicit instructions” by taking part in a wind power auction, as it distanced itself from any new investments inside Russia.
Fortum also found itself in an extraordinary public row with wind turbine giant Vestas – which itself had to beat a hasty retreat from the Russian market – over a dispute concerning cancelled orders for Russian projects.