Deal moves Russian power to Finnish hands

Finnish power generator Fortum takes full control over hydropower developments in Murmansk Oblast and the Republic of Karelia

A historical agreement between Fortum, Rosatom and Gazprom gives the Finnish energy major control over a lion’s share of hydropower capacities in Northwest Russia.


The deal signed between the three companies will give Fortum ownership over all of TGC-1’s hydropower assets in Murmansk Oblast, the Republic of Karelia and Leningrad Oblast. In addition, the Finnish company will take over a 15 percent stake in the Fennovoima nuclear power project.

In return, Gazprom and its subsidiary Gazprom Energy Holding will take over all of TGC-1’s thermal power capacities. The Territorial Generating Company No 1 (TGC-1) is one of the biggest electric power producers in Northwest Russia and has until now been owned by Gazprom (51,8%) and Fortum (29,5%).

The swop also includes the inclusion of Rosatom, Russia’s state nuclear power corporation, with a 25 percent stake in a new joint venture with Fortum. Fortum takes the remaining 75 percent of the new company, Yle informs.

The TGC-1 owns and operates a fleet of 40 hydro power plants with a total capacity of about 3,000 MW, and hydro power generation accounts for 41 percent (12-13 TWh) of the company’s total electricity generation. In addition, the company owns 14 thermal plants with a total electricity capacity of 4,300 MW and has a total heat capacity of 16,500 MW (29 TWh/a).

With the deal, a number of power plants originally built by Finnish companies, some of them located on territories previously belonging to Finland, will again get Finnish ownership. TGK-1 owns a string of hydropower plants in the Kola Peninsula, several of them located in Pechenga, the area which was part of Finland in the mid-war period. The TGK-1 also has generating capacities in the Republic of Karelia.

The takeover of the Russian assets will boost Fortum’s hydropower portfolio by 60 percent, the company says in a press release. ”This clearly demonstrates Fortum’s strong commitment to CO2-free production”, CEO Tapio Kuula says.

“These transactions strengthen the cooperation between energy sector companies in Finland and Russia”, CEO of Rosatom Sergey Kirienko says in the same press release.

The deal might take the steam out of an ongoing corporate dispute between Fortum and TGC-1 co-owner Gazprom Energy Holding. According to newspaper Kommersant, the Finnish company has strongly protested against the recent selling of one of TGC’s hydropower plants in Murmansk Oblast to industrial company Rusal and has consequently blocked a number of other corporate decisions.

The 15 percent ownership stake in the Fennovoima nuclear power project will give Fortum a key role in the development of the controversial project. As previously reported, the projected NPP is based on Russian technology and is owned 34 percent by Rosatom.