Russia takes temporary control of Uniper, Fortum power assets

Russian President Vladimir Putin signed an order April 25 transferring temporary control of power assets belonging to Fortum and Uniper to Rosimushestvo, the Federal Agency for State Property Management.

Russia's move is its latest response to Western sanctions, which were introduced following Moscow's invasion of Ukraine in February 2022. The sanctions have included the temporary seizure of Russian assets in Europe including those owned by Gazprom and Rosneft in Germany.

Germany's Uniper and Finland's Fortum are among many Western companies that have announced plans to exit the Russian market in response to the war. This process has been complicated by financial sanctions and government intervention in control of assets.

Uniper said it is currently reviewing the legal situation in a statement released April 26.

The Russian government order covers Uniper's 83.73% stake in Unipro -- operator of five thermal power plants in Russia with a total capacity of 11.25 GW.

"Uniper has de facto no longer been able to exercise operational control over Unipro since the end of 2022. In balance sheet terms, Unipro has been deconsolidated and practically completely written off since the end of 2022," the company said.

Uniper had previously agreed to sell its stake to a Russian buyer in September 2022. It said it had applied to the Russian government for approval of the sale, but this had not yet been granted.

Uniper previously wrote down the value of its Unipro assets to just Eur1.

Fortum said in a statement April 26 that it had not received official confirmation from the Russian authorities and is currently investigating the situation.

"Fortum's current understanding is that the new decree does not affect the title (registered ownership) of the assets and companies in Russia. However, it remains unclear how this affects e.g. Fortum's Russian operations or the ongoing divestment process," the statement said.

Fortum's Russia division has seven thermal power plants in the Urals and West Siberia with a combined power generation capacity of 4.7 GW and heat production capacity of 7.6 GW. Fortum also has a portfolio of 3.4 GW of wind and solar plants. Fortum said that the book value of its Russian holdings was Eur1.7 billion ($1.9 billion) as of Dec. 31, 2022.

Since the conflict began Western companies have perceived Russia to be unpredictable and moved to halt investments and try to exit the market.

"I'm not surprised by this next level taken by the Russian government," Mario Mehren, the CEO of German energy group Wintershall Dea, said April 26.

"It's another in a chain of decrees by Russia directly interfering into the rights of foreign companies in Russia," he said.

Russia has taken control of other energy assets owned by Western investors since the war started.

It established Russia-based operators for the Sakhalin 1 and 2 oil and gas projects in Far East Russia and invited previous shareholders to apply to retain their stakes. Foreign majors did not apply to join the new operators. As a result, Exxon left the Sakhalin 1 project and Shell left Sakhalin 2. Both companies had announced plans to exit Russia shortly after it invaded Ukraine.

Keep up to date with the latest sanctions on Russian commodities and their effects on the markets with this infographic.