The UN Permanent Conference on Trade and Development UNCTAD estimates in a comprehensive annual investment report, World Investment Report 2022:ssa, At Fortum had assets in Russia worth no less than 32.6 billion dollars, or slightly more than 30 billion euros in today’s money.
In its top 10 review, UNCTAD considered Fortum to be the clear number one among Western companies in terms of assets in Russia.
Second was France Renault 15.9 billion, the third largest British oil giant BP 14.4 billion and in fourth place is the French oil giant Total Energies With $13.7 billion in assets.
Is someone talking paltur?
UNCTAD’s calculation of Fortum’s figures is confusing. Fortum said in May of last year, that the company would have invested a total of around six billion euros in Russia.
“When you calculate the investment made in the acquisition of the Russian operations, the dividends received and the net financing items, the net cash loss for Fortum and the cost of our Russian venture is a total of approximately two billion euros”, CEO Markus Rauramo stated.
The difference in opinion about the value of the lost property is quite large. Are the figures being falsified, or is there an explanation? At least one can be found.
UNCTAD evaluates the price as in business transactions
UNCTAD has estimated the value of Western companies’ assets in Russia using data from 2021, when Fortum achieved one of the best results in its history with its subsidiary, the German Uniperin through.
Rauramo only talked about Fortum’s direct investments in Russia and completely failed to mention Uniper’s billion-euro investments in Russia, which in 2021 were part of parent Fortum’s assets. After all, Fortum was forced to sell Uniper to the German government in the fall of 2022, and will take losses of six billion from the deal.
The prognosis for success is poor, if not hopeless.
UNCTAD evaluates Fortum’s assets in the same way as it is normally evaluated in, for example, a business transaction situation. Power is also an investment with which to do business.
The value of this business is defined both at the level of investment and 10–20 years’ returns – often EBITDA or operating profit. This happens every day on the stock exchange and Uniper’s subsidiary Unipro was listed on the Moscow Stock Exchange.
A hopeless legacy
Thus, no one has necessarily fogged up the Russia risk assessment, but not everything related to it has been explained in Fortum. Now the energy company is trying in arbitration to recover its receivables from Russia Putin’s from the administration.
The prognosis for success is poor, if not hopeless. Maybe it describes the Finnish attitude. Sticking to agreements is in the blood here, in Russia it is in the hands of the strongest.
The author is the editor-in-chief of Kauppalehti.
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