Ukraine news: Russia takes control of foreign firms’ assets

The Kremlin warned Wednesday that it could seize more Western assets in retaliation for foreign moves against Russian companies.

President Vladimir Putin signed a decree late Tuesday establishing temporary control over the Russian assets of Finland’s Fortum and Germany’s Uniper, which operate power plants in Russia.

Fortum said it was “investigating” and that former Fortum subsidiary Uniper was “considering” the move.

A spokesman for Germany’s finance ministry, which oversees the government’s ownership of Uniper, said Berlin needs to assess the concrete implications of the Russian order.

Finnish Treasury Minister Titti Tuplainen tweeted that the information was “concerning” and that the country, as Fortum’s majority owner, would follow the matter closely.

The order signaled that Moscow had already taken action against the assets of Uniper’s Russian divisions, Unipro and Fortum. Russia has made it clear that the move could be reversed.

Moscow has reacted angrily to reports that G7 nations are considering a near-total ban on exports to Russia, but many have gone far to limit Russia’s combat capabilities in Ukraine. calls for strict sanctions on

Meanwhile, the European Union is considering using frozen Russian assets to rebuild Ukraine. Germany nationalized the former unit of Russian energy giant Gazprom last year.

“The adopted order is a response to the aggressive actions of unfriendly countries,” Kremlin spokesman Dmitry Peskov said. are doing.”

Putin’s decree “does not deal with property matters and does not deprive owners of property. External control is temporary and the original owner no longer has the right to make administrative decisions.” It just means no,” Peskov continued.

“The main purpose of the presidential decree is to form a compensation fund for the possible application of reciprocal measures in response to the illegal expropriation of Russian assets abroad.”

lack of clarity

Uniper owns 83.73% of Unipro, which operates five power plants with a combined capacity of over 11 GW and approximately 4,300 employees in Russia.

Fortum’s Russian division has seven thermal power plants in the Urals and Western Siberia, and a portfolio of wind and solar power plants in Russia with local venture partners. The book value of these assets reached €1.7 billion (US$1.87 billion) at the end of 2022.

Fortum is majority-owned by Finland, which joined the NATO military alliance earlier this month in what Moscow called a dangerous mistake.

The Finnish Ministry of Foreign Affairs will not immediately comment on how Russia’s decision will affect relations between the two countries.

“Fortum’s current understanding is that the new legislation will not affect the ownership (registered ownership) of Russian assets and companies,” Fortum said in a statement.

“However, it remains unclear how this will affect things such as Fortum’s Russian operations and the ongoing sale process,” he added.

Both companies are trying to withdraw from Russia. In February, Uniper valued his Unipro stake at a symbolic €1, reflecting the likelihood that the deal will not take place.

Peskov said the list could grow as external controls are being put in place for assets “most critical to the stable functioning of Russia’s energy sector.”

The shares of the two entities were temporarily placed under the control of Rosimushchestvo, the federal real estate agency.

New chief executives took office, Unipro’s Vasily Nikonov and Russia’s Fortum’s Vyacheslav Kozhevnikov, both men moving from the Russian oil companies on Rosimushchestvo’s orders.

Russia’s state-owned bank VTB said this week that Russia should consider taking over and managing the assets of foreign companies such as Fortum and returning them only if sanctions are lifted. Fortum has previously pointed out the risk of expropriation.

Asset sales by investors in “unfriendly” countries require government committee approval and, in some cases, presidential approval.

Moscow’s move poses new headaches for companies still trying to get out of Russia. Companies investing in major energy projects and banks already face tougher exit paths.

Wintershall Dare, which still holds shares in many Russian joint ventures with Gazprom, called Moscow’s policy “unpredictable” and “unreliable”.

Additional reporting by Anastasia Lyrcikova, Moscow, Essi Lehto, Helsinki, Anna Ringstrom, Stockholm, Christoph Steitz and Vera Eckert, Frankfurt, and David Ljunggren, Ottawa.Editing by Alex Richardson and Peter Graff

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