March – May 2022: Decision to exit Russia
As of early March 2022, Fortum had stopped new investment projects in Russia. Since deciding to exit the Russian market completely in May 2022, Fortum has been preparing a controlled exit from this market, with the divestment of the Russian assets (formerly PAO Fortum) as the preferred path. Any sale of these assets require Presidential approval in Russia.
November 2022: Planned replacement of Russian nuclear fuel supplier
From the beginning of the war, Fortum stopped sourcing coal, wood and other biomass fuels from Russia for power generation purposes. The only Russian fuel that could not be immediately replaced was for the Loviisa nuclear power plant. Fortum has a nuclear fuel supply agreement in place for the duration of the Loviisa NPP operating licences. In November 2022, Fortum agreed with Westinghouse Electric Company for the design and supply of a new nuclear fuel type. Taking the new fuel into use is a multi-year project requiring regulatory approvals.
April – July 2023: Full deconsolidation and separation of Russian assets
In April 2023, the Russian authorities seized control of Fortum’s assets in Russia and deprived Fortum of its shareholder rights, based on a Presidential decree. The de facto loss of control of the Russian operations triggered a full financial deconsolidation and impairment of those assets, as reported in Fortum’s second quarter 2023 results. The Russian assets have also been fully separated operationally from Fortum Group, and the former PAO Fortum has been renamed to Forward Energo by the new management.
Fortum has brought an international investment arbitration claim against the Russian Federation for the unlawful seizure of its assets, which represents a violation of the international investment treaty protections granted to foreign investors in Russia. Fortum sent notices of dispute to the Russian Federation in July 2023, which are the first step required for arbitration proceedings. In February 2024, Fortum initiated arbitration proceedings against the Russian Federation and will claim compensation for the unlawful seizure of its assets in order to protect its legal position and shareholder interests.
Fortum previously had a presence in Russia for more than 60 years. In recent years it actively focused on developing on-shore wind and solar power production. While the exit from the Russian market has been irrevocably decided in 2022, the current situation in Russia means that a final divestment and related actions are yet to be concluded.