The transaction also includes a corresponding proportion of shares in other companies being incorporated as a result of the unbundling of Kolenergo.

Fortum will obtain 23.33% of Kolenergo’s and its incorporated companies’ voting rights. The transaction is estimated to take place during the first quarter of 2006 after formal approvals by the seller’s board of directors and relevant authorities.

Kolenergo is a major power company located in the Kola region of northwest Russia with net sales of approximately $300 million in 2004. Kolenergo has a hydro power capacity of 1,593 megawatts with an annual hydro generation of some 6.5TWh. The volume of electricity sales and transmission totals approximately 11TWh annually and the company has some 200,000 electricity customers. Kolenergo’s annual heat sales total some 4TWh.

As part of the major Russian power market reform, the generation assets of Kolenergo, Lenenergo and Karelenergo are to be merged to a Territorial Generation Company, TGC-1. Kolenergo’s hydro power represents 55% of TGC-1’s combined hydro power capacity of 2,874 megawatts.

This is another important step for Fortum in Russia. The transaction further strengthens our position in TGC-1 and we are very pleased to increase our share of especially hydro power assets in the company, said Fortum’s senior vice president Tapio Kuula.