Fortum has acquired a 12.5% stake in OAO St Petersburg Generation Company, which is owned by OAO Lenenergo, for E120 million in a public auction.

St Petersburg Generating Company (PGC) generates power and heat for the St Petersburg region. Its annual power generation is approximately 12TWh and heat production approximately 2TWh.

The deal, which was made under an agreement with ABN Amro, will increase Fortum’s stake in the Russian utility to close to 47%.

The company was formed when the generation assets of regional power company Lenenergo were unbundled and incorporated as part of the Russian power reform. As part of the reform, the incorporated generation assets of Lenenergo and two other regional power companies in north-west Russia, Karelenergo and Kolenergo, are to be merged into a Territorial Generation Company, TGC-1. Once concluded, this transaction will increase Fortum’s ownership in TGC-1 from the current approximately 18% to slightly over 25%.

Lenenergo plans to use the proceeds from the sale of PGC shares (less all taxes and other required payments, as well as the auction costs) to finance its investment program.