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MarketScreener Homepage  >  Equities  >  NASDAQ OMX HELSINKI LTD.  >  Fortum Oyj    FORTUM   FI0009007132

FORTUM OYJ

(FORTUM)
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Fortum : Finland Approves Russian-Backed Nuclear Plant

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12/05/2014 | 11:40am EST
By Juhana Rossi 

HELSINKI--Finland has approved the building of a controversial Russian-backed nuclear power plant, strengthening energy ties between Helsinki and Moscow at a time when many western capitals are seeking to isolate Russia over its intervention in Ukraine.

Finnish lawmakers on Friday voted by 115 to 74 in favor of the government's decision to approve a plan submitted by a Finno-Russian consortium Fennovoima Oy to build a new nuclear power plant on the northwest coast of Finland at an estimated cost of between EUR4 billion ($4.9 billion) and EUR6 billion. Russian nuclear power company Rosatom holds a 34% minority stake in the group and will raise finance for the new plant.

Despite the large vote in favor, Fennovoima's reliance on Russian backing has stirred unease among some Finnish politicians and the public at large, many of whom see the deal serving Russian geopolitical interests at a time of heightened tensions. Eyebrows are also likely to be raised in other European countries.

Ville Niinistö, the leader of the Greens of Finland, which opposes nuclear power on principle, said Russia can use Fennovoima to create a perception, especially before its own people, that Moscow hasn't been isolated because of its Ukraine policy.

Earlier this autumn, Mr. Niinistö withdrew his party from the Finnish government in protest over the project, leaving the administration with a razor-thin majority in Parliament.

Fennovoima received an initial approval for the project in 2010 but has struggled to attract funding as doubts over nuclear power's profitability and safety have grown. The project was floundering before Rosatom's entry in late 2013.

Despite Rosatom's backing, Fennovoima's future remained doubtful until this week when the Finnish energy utility Fortum Oyj said it would take up to a 15% stake in Fennovoima, ensuring the project will meet a 60% indigenous ownership requirement set by the Finnish government.

Fortum's investment is contingent on the utility getting a majority ownership of a sizable number of hydropower plants in Russia as part of an asset swap involving Rosatom and the natural gas giant Gazprom.

When the European Union decided to apply new economic sanctions against Russia in September, Finland, along with some other EU members, publicly called for delays to their implementation in the hope that the Ukraine crisis would show signs of easing.

Finland's problem is that the vote can be seen as helping Russia's interests even if it is simply driven by commercial considerations, said Arkady Moshes, a scholar of EU-Russia relations at the Finnish Institute of International Affairs in Helsinki.

"The context and the timing of this deal allow a very critical interpretation of it in Finland and even in other European countries," said Mr. Moshes.

Russia has been perceived as trying to increase its influence in Europe through energy, and according to Mr. Moshes both politics and business shape Rosatom's export efforts.

"It would be inconceivable that such a large company would be immune to political motives," he added.

Write to Juhana Rossi at juhana.rossi@wsj.com

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Financials (EUR)
Sales 2019 5 587 M
EBIT 2019 1 158 M
Net income 2019 1 323 M
Debt 2019 5 318 M
Yield 2019 4,85%
P/E ratio 2019 15,0x
P/E ratio 2020 14,0x
EV / Sales2019 4,56x
EV / Sales2020 4,64x
Capitalization 20 147 M
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Average target price 22,88  €
Last Close Price 22,68  €
Spread / Highest target 36,7%
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Matti Juhani Lievonen Chairman
Markus Heikki Erdem Rauramo Chief Financial Officer
Kim Juhani Ignatius Director
Eva Gerd Alice Hamilton Independent Director
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