Fortum sues former renewables subsidiary seized by Putin’s Russia
Russian government seized Fortum subsidiary that operated 3.4GW of wind and solar farms in country last year
Finnish state-owned energy company Fortum has launched an €800m ($870m) court claim against its former Russian subsidiary for defaulting on loans after it was seized by the state.
The Russian government passed a decree last year that saw it take control of PAO Forward Energo, then known as PAO Energy, which had been the biggest player in the country’s renewables sector.
Fortum announced today that it has launched proceedings in the Dutch courts over €600m of loans it had granted to its former subsidiary.
Most of these loans have reached their maturity date and have not been repaid, it said. In addition, it said Forward Energo has failed to pay the interest due on all loans.
Including interest, Energo said the claim against its former subsidiary comes to around €800m, with the final amount depending on the rouble-euro exchange rate and interest due.
After the invasion and the imposition of sanctions, Fortum ring-fenced its subsidiary with a view to an orderly divestment of the business before the government of Russian President Vladimir Putin seized the business.
Fortum slammed this move as a “crude violation of international law” and this year launched an international arbitration claim against Russia seeking more than €3bn in compensation.
Fortum’s retreat from the Russian market also resulted in an acrimonious row with Danish turbine maker Vestas over cancelled orders as Fortum launched arbitration proceedings claiming more than €200m for unfulfilled turbine deals.