Russian exit made difficult for Enel, Fortum

The Azovskaya wind farm in Rostov, Russia. Source: Enel

August 9 (Renewables Now) - Russian President Vladimir Putin has temporarily frozen foreign shareholders’ potential exit from the domestic power sector in a move that will reportedly obstruct Italy’s Enel SpA (BIT:ENEL) and Finland’s Fortum Oyj (HEL:FORTUM) from doing exactly that.

Daily newspaper Kommersant today reported, quoting its own sources, that a presidential decree prohibits Western investors from selling their stakes in Russian businesses that involve the production and supply of heat and electricity until December 31, 2022, without special permission from the President. According to the report, Putin will receive a list of companies affected by the ban this week.

In June, Italian utility Enel announced a plan to fully exit its subsidiary in Russia for an overall consideration of about EUR 137 million (USD 139.7m). More specifically, it agreed to dispose of its entire 56.43% stake in Enel Russia to local oil giant Lukoil (MCX:LKOH) and private fund Gazprombank-Frezia. The transaction was expected to close within the third quarter of 2022 but according to Kommersant’s sources it has now been temporarily frozen.

Through Enel Russia, the Italian company has about 5.6 GW of conventional capacity and some 300 MW of wind projects in different stages of development.

Finland’s Fortum, on the other hand, has been pursuing “a controlled exit” from Russia over the past few months. In July it was actively collecting bids from potential buyers, Kommersant says. Among the assets it is trying to get rid of are three solar plants and one wind farm.

A spokesperson for the company told Renewables Now that Fortum is aware of the new degree in Russia and is currently analysing its possible implications on the plan to exit the local market.

The Russian daily further cited its sources as saying that if European companies are indeed forced to remain in Russia, they will have to find ways to deal with current restrictions in order to service Western equipment, including wind farms.

(EUR 1 = USD 1.020)

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Ivan is the mergers and acquisitions expert in Renewables Now with a passion for big deals and ambitious capacity plans.

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