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. Last Updated: 07/27/2016

Fortum Not Expected to Win Control of TGK-1

Russia will not allow Finnish energy firm Fortum to take control of power firm TGK-1 for strategic reasons as it serves St Petersburg, analysts said Friday.

They said the management of Unified Energy Systems, which is being dismantled as part of power sector reforms, made the comments on Fortum during a meeting with analysts late last week.

UES declined to comment, while Fortum vice president Kari Kautinen said in a statement that it was too early to discuss what stake it might bid for when more TGK-1 shares are sold in July, but Fortum, as the biggest minority investor, already had an interest in TGK-1's success. Fortum has a blocking stake of more than 25 percent.

"The announcement suggests that a leading foreign investor in Russia's electric utilities sector cannot take charge of its main holding in the industry," Aton said after the meeting.

"We see the news as negative for the entire generation universe, and believe it increases the political risks faced by potential strategic investors.

On Friday, analysts also quoted UES's management as saying that Fortum, Italy's Enel and Czech firm CEZ were seeking a blocking stake in one of the generation firms, OGK-5.

OGK-5 sold 14.1 percent of its capital in a pilot additional share issue last year and UES is planning to sell another 25 percent out of its 75.03 percent stake in OGK-5 in the second quarter of 2007.