Finnish Nuclear Plant to Move Ahead After Financing Secured

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A plan for a nuclear plant in the north of Finland crossed a major hurdle after the government said the proposal had the needed funding to move ahead without additional financing from Russia.

Finnish Economy Minister Olli Rehn said in Helsinki on Wednesday that the backing of three Finnish companies pushed the Fennovoima Oy project past a threshold set by the government to allow the plant to continue with the needed approval processes.

State-controlled utility Fortum Oyj, stainless steel maker Outokumpu Oyj and real estate developer SRV Oyj announced earlier on Wednesday plans to either buys stakes in Fennovoima or increase their current holdings. The last minute commitments fulfilled the government’s publicly stated goal of having 60 percent ownership for the new reactor from within the European Union and European Free Trade Association.

“All three companies have made their decisions fully independently,” Rehn told reporters, adding that the approvals still necessary will take about two years to complete.

Rosatom Corp. -- a Russian-state owned nuclear company that does everything from purchasing uranium to design, construction and commissioning of plants -- had offered to step in to fill the gap. The Finns, however, balked at the idea of Rosatom, which has been contracted to build the reactor and owns 34 percent of the project, of having too much influence.

Backers had been hoping for a last-minute deal that would see Fortum, majority owned by the Finnish state, taking a 15 percent stake in Fennovoima. In exchange, Fortum wants to buy a majority holding in the TGC-1 hydro assets in northeastern Russia, near the Finnish border. Fortum announced Wednesday that it will buy a 6.6 percent Fennovoima holding, and that talks over the hydro power purchase are ongoing.

Fennovoima Holdings

SRV said in statement that the construction company will take a 1.8 percent stake in the nuclear plant and serve as project manager for the site. Outokumpu, whose biggest shareholder is the Finnish state, is increasing its holding 1.8 percentage points to 14 percent.

“Two state-controlled firms, Outokumpu and Fortum, were forced to participate, with the latter showing extremely bad negotiation skills,” said Jukka Oksaharju, a Helsinki-based equity strategist at Nordnet AB, which offers securities transactions over the Internet. “Fortum will not anymore be able to get credible commercial commitments on the hydro assets.”

Fennovoima’s application at the end of June to move forward with the project was rejected after the government tossed Croatia-based Migrit Solarna Energija from the list of EU-based investors, arguing the company was receiving its financing from Russia. Rehn at that time extended the deadline for lining up European investors until Aug. 6.

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