The state’s function as owner must be reconsidered by the future administration. The disastrous ownership control of Fortum, a state-majority energy business, is the finest illustration of the necessity for a reassessment.
Although the Fortum scandal has dominated the news this year, the state owner’s costly error has persisted for a long time.
With approval from the government’s economic policy ministerial committee, Fortum’s board opted to sell Finland’s power transmission networks to international infrastructure investors in 2013.
Foreign owners engaged in sophisticated tax planning gained control of the vital infrastructure, which offered a definite profit in a monopoly position. He was the Minister of Ownership Pekka Haavisto at the moment (green).
It was found that the new owner began increasing transfer prices soon after the sale while paying little to no taxes to Finland. Haavisto regrets that he believes the business abuses its exclusive position (IS February 3, 2016).
Fortum had also sold its power grid operations in Sweden and Norway at about the same time. The transactions had resulted in a financial gain for the corporation of about 6.3 billion euros. The balance statement has the money lying around.
He was elected prime minister of Finland’s central government in 2015, which also gained control of ownership management. He started the “balance sheet to work” campaign with the intention of raising the value of state-owned businesses in order to raise money for spending.
The owner’s advice was particularly concerned about the cash on Fortum’s balance sheet.
According to Talouselämä’s study, ownership control put pressure on Fortum since if the money wasn’t spent quickly, it would be given to the government and other owners. Along with the billions invested in the electrical network, Fortum’s management’s compensation growth was also under jeopardy. (TUE 11.11.)
“The state should, at the very least, refrain from acting as a majority owner in listed corporations, as demonstrated by Fortum. Skills have been exhausted and interests have become seriously muddled.”
Fortum discovered the target energy behemoth Uniperista, where the risks and benefits were both enormous. The gas market in Central Europe was already a long way from Fortum’s primary strategic objective.
Erkka Felt, an analyst with Talouselämä, said, “I take the December 2017 report of ownership management as the state owner obviously wanted Uniper and still with majority ownership.”
It is now widely acknowledged that risk management was disastrous. Sipilä and Mika Lintilä (Centre), who succeeded him as Minister of Ownership, have denied giving their approval to the Uniper transaction in 2017.
Salut, Marine (sd) The state owner wanted the risks of Uniper’s trading operation to be assessed later, according to the government’s Minister of Ownership Tytti Tuppurainen (sd). However, it appeared that the state owner now placed more value on growth and increasing dividends than the primary objective.
It then creaked. Ukraine was invaded by Russia in February 2022. Fortum tried to take risks, but they failed. A little under six billion euros were ultimately spent by the corporation on its journey in Germany. The power transmission networks’ whole capital was lost.
The state should, at the very least, refrain from acting as a majority owner in listed corporations, as demonstrated by Fortum. Interests are now very muddled, and skills are exhausted.