Fortum – formerly the biggest player in Russian renewable energy – accused Vladimir Putin’s government of “a crude violation of international law” after its subsidiary in Russia was seized by the state.
Finnish state-owned energy group Fortum lodged a formal complaint with the Russian government after a decree took ownership of PAO Fortum and fired its CEO.
Fortum was before the invasion of Ukraine 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.
After the invasion and the imposition of swingeing sanctions it ring-fenced PAO Fortum with a view to an orderly divestment of the business, but said the late-April Russian decree “deprived Fortum of its shareholders rights”.
The Finnish group said: “Fortum’s power plants in Russia are the most modern and efficient in the market and maintained to high industry standards. Fortum considers Russia’s actions to be a crude violation of international law and of Fortum’s rights as a foreign investor.
“Fortum is preparing to take all necessary measures to protect its rights under relevant international legislation.”
Extracting itself from Russia has turned into a messy and expensive process for Fortum, which said in February it would record additional pre-tax impairments of €990m ($1.06bn) related to its Russia segment in the fourth quarter of 2022 “due to the increasingly complex operating environment and prolonged uncertainty” regarding its activities there.
PAO Fortum had already show 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.
