Norilsk Nickel, Fortum call off Kolenergo stake deal-1

Norilsk Nickel and Fortum have called off a deal on the Finnish energy concern buying a stake in Kolenergo, the biggest electricity producer in northwestern Russia, Fortum said Friday.

Under an agreement signed on November 25, 2005 Fortum was to acquire a 24.83% in Kolenergo. The deal would have also strengthened Fortum’s position in Territorial Generation Company, TGC-1, which will be formed through the merging of the generation assets of Kolenergo, Lenenergo and Karelenergo. Now Fortum’s ownership in TGC-1 will be just over 18%.

Fortum’s press service said the decision was based on the conditions set by the Russian competition authority, the Federal Anti-Monopoly Service, in August. Further talks over the terms of the transaction between Norilsk Nickel’s parent company Interros and Fortum also ended without success.

Russian electricity monopoly Unified Energy System said it was disappointed that the deal had fallen through.

“We are disappointed by the news that Norilsk Nickel and Fortum have failed to complete the deal to increase the Finnish company’s stake in TGC-1,” UES chief executive Anatoly Chubais said. He called on the parties to continue talks and reach a compromise.

“Nevertheless, it is the position of our company that Fortum is one of the leading strategic investors that the Russian energy sector is extremely interested in,” he added.

Fortum is the largest energy company in northern Europe specializing in electricity production, the extraction and refining of oil and maintenance of generating facilities.