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17 August 2007 - In a statement release today, Fortum has announced it is to sell its one third stake in JSC Lenenergo, a Russian power distribution company for €295m ($397m). The buyer is a consortium comprising Russia's RAO UES, VTB Bank and IDE Electricity Distribution Investment.
After tax, Fortum will book a gain of around €230m, corresponding to €0.26 per share, which will be incorporated into its third-quarter financial results.
Lenenergo currently distributes electricity in the city of St Petersburg and the surrounding Leningrad region
According to the company, the decision to sell the Lenenergo shares is in line with Fortum's strategy to invest primarily in Russian generation assets.
Platts reports that Fortum's senior vice president Tapio Kuula said the company is looking at opportunities in the Russian generation sector, but no concrete dates were set for new deals following the sale of the Lenenergo stake. He is quoted as saying "work is ongoing".
The generation assets of the original Lenenergo company were integrated into the north-western Territorial Generating Company (TGC-1) in 2006 as part of the Russian power sector reform.
Fortum has a stake of just over 25 per cent in TGC-1, making it the second largest shareholder. TGC-1 has a production capacity of about 6000 MW power and around 17 000 MW heat. More than half of its power generation capacity is hydropower.
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