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International Internet Magazine. Baltic States news & analytics Friday, 28.02.2020, 22:51

Fortum mulls divesting its Baltic heating business

BC, Vilnius, 06.02.2020.Print version
Finnish business group Fortum might divest its heat production and supply business in the Baltic states, Poland and one Finnish region, writes LETA.

Based on initial assessments, these district heating and cooling businesses have been identified as operations that could provide higher growth and value potential with an alternative ownership structure, Fortum said.

"In line with its strategy and continued review of the business portfolio, Fortum has decided to assess strategic options, including possible divestment, of its district heating and cooling businesses in Poland, Estonia, Lithuania, Latvia, and Jarvenpa in Finland," the Finnish company said in a statement.

Vitalijus Zuta, head of Fortum Heat Lietuva, told LETA/BNS Fortum is only considering exiting Lithuania but no final decisions have been made yet. He could not comment any further.

"I have nothing to add. It's a possibility under consideration, and no decisions have been made yet. (…) They have definitely not been made, and necessary studies will be done this year and later decisions will probably be made," Zuta said.

Fortum said the business in question also includes the combined heat and power (CHP) plant built in cooperation with Lithuania's Ignitis Grupe (Ignitis Group) in Kaunas, Lithuania's second-largest city.

Nerijus Rasburskis, head of the Heat and Power Solutions Department at Ignitis Group, told he had no additional information on Fortum's plans.

"As far as I understand, they are not leaving but are just reviewing their strategy. Our project is being implemented according to its schedule and there are no actions from their side," Rasburkis told.

According to Fortum, in the Baltics, the company provides district heating in five cities (Tartu and Parnu in Estonia, Daugavpils and Jelgava in Latvia and Klaipeda in Lithuania). Further, Fortum owns four CHP plants with one additional new plant in Kaunas in Lithuania (49% owned), which is under construction.

In 2019, Fortum's sales in the Baltics included 1.5 TWh of heat and 0.6 TWh of power with an EBITDA of EUR 66 mln, including subsidies for bio-based energy.

In Lithuania, the Fortum group consists of the main company, Fortum Heat Lietuva, and its subsidiaries, including Fortum Klaipeda (it owns 95% of shares), Fortum Joniskio Energija (66.2%), Fortum Svencioniu Energija“ (50%). The group also owns 49% in Kauno Kogeneracine Jegaine, a joint enterprise owned with Lietuvos Energija, which will build a waste-to-energy combined heat and power plant (CHP) in Kaunas, Lithuania.

Fortum Heat Lietuva also has a 19.47 stake in Klaipedos Energija.

The Netherlands' Fortum Holding, part of Finland's Fortum, owns 100% of Fortum Heat Lietuva.

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