Russia seizes more Western assets, narrowing options for company exits

Reuters:

HELSINKI, April 26 – Russia seized temporary control of assets of Finnish energy group Fortum and its former German subsidiary Uniper, sowing confusion over the fate of other Western companies in Russia as pressure grows to hit Moscow with more sanctions over Ukraine.

President Vladimir Putin late on Tuesday signed a decree establishing temporary control of the Russian assets of the two European state-owned energy firms. Fortum (FORTUM.HE) said it was “investigating” and both Uniper (UN01.DE) and the German finance ministry had no immediate comment.

The decree – outlining possible retaliation if Russian assets abroad are seized – showed Moscow had already taken action against Uniper’s (UN01.DE) Russian division Unipro (UPRO.MM) and Fortum’s assets. Russia made clear that the move could be reversed.

Moscow has reacted angrily to reports that Group of Seven nations are considering a near-total ban on exports to Russia, while many have called for far tougher sanctions to limit Russia’s ability to fight in Ukraine. The European Union is looking at using frozen Russian assets to rebuild Ukraine.

Uniper owns 83.73% of Unipro, which operates five power plants with a total capacity of over 11 gigawatts in Russia and about 4,300 employees.

Fortum is majority-owned by Finland, which joined the NATO military alliance early this month. Moscow said Finland had made a dangerous mistake.

The Finnish foreign ministry would not immediately comment on how Russia’s decision would reflect on relations between the two countries.

“Fortum’s current understanding is that the new decree does not affect the title (registered ownership) of the assets and companies in Russia,” the company said in a statement.

“However, it remains unclear how this affects e.g. Fortum’s Russian operations or the ongoing divestment process,” it added.

Fortum’s Russia division has seven thermal power plants in the Ural region and Western Siberia, while it also holds a portfolio of wind and solar plants in Russia, together with local venture partners. The book value of those assets stood at 1.7 billion euros ($1.87 billion) at the end of 2022.