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. Last Updated: 07/27/2016

Fortum Plans 10% Increase In Investment for TGK-10

Fortum bucked market trends Thursday by pledging to boost planned investment in Russia by more than 10 percent and said it expected to reap more savings than previously forecast.

The utility said it would invest 2.5 billion euros ($3.2 billion) in Russia to boost the capacity of power producer TGK-10 up from a previous target of 2.2 billion euros. Some 400 million euros will have been spent by the end of 2008.

But it said TGK-10 integration efforts had progressed well, and annual efficiency improvements worth more than 100 million euros would be reached in 2011, compared with a previous forecast of at least 30 million euros per year.

Fortum bid for TGK-10 this year and currently holds 93 percent of the company. The Russian firm has agreed to make investments to increase electricity generation capacity by approximately 70 percent to 5,300 megawatts by 2013.

"Fortum has put considerable efforts into integrating TGK-10. ... The Fortum management model, organizational structure and the way of working were in place at the beginning of September," the company said in a statement.

"The integration has proceeded well, and several targets for efficiency improvements have been identified," it said.

Marina Balabanova, TGK-10's vice president for public and state relations, said Thursday that the company was preparing to change its name next year to reflect the Fortum brand, Interfax reported.

"I think that people will really focus on the raising of the capital expenditure guidance," one Helsinki-based analyst said.

"Especially when it comes to Russia, when the future of the investment is so uncertain."

Reuters, MT