Finnish energy player Fortum has announced plans to sell its stake in Russian electricity distribution firm JSC Lenenergo. The interest, which represents just over one third of the utility's shares, will be sold for approximately E295 million.

Fortum said that its decision to sell the Lenenergo shares, which will be bought by a consortium consisting of VTB Bank, IDE Electricity Distribution Investments 1 Limited and Russian energy player RAO UES, is in line with the company’s strategy to invest primarily in Russian generation assets.

Lenenergo does not fit this strategy as it is currently involved in electricity distribution in the city of St Petersburg and the Leningrad region. Fortum said that, as a result of the divestment, the company will book an after-tax gain of approximately E230 million, corresponding to E0.26 per share, in its Q3 2007 financial results.

The generation assets of the original Lenenergo were integrated into Russia’s northwestern Territorial Generating Company (TGC-1) in 2006, as a part of the region’s power sector reform. Fortum holds just over 25% of TGC-1, making it the utility’s second-largest shareholder.

TGC-1 operates in a large area that covers St. Petersburg to the Kola Peninsula. The production capacity of TGC-1 is about 6,000MW power and about 17,000MW heat, and more than half of its power generation capacity is hydro power.