News, Power Generation & Electrical

Statkraft divests its shares in E-CO Vannkraft and sells time-limited rights to electricity production at Rana

In order to meet the Norwegian Competition Authority's orders relating to production capacity in the Southern Norway price area and Central and Northern Norway price area, Statkraft has today entered into agreements with a Finnish Consortium consisting of Etelä-Pohjanmaan Voima...

EPV and KV signed the agreements on behalf of the Consortium. OK is to participate through a shareholding in both EPV and KV. Under the agreements Statkraft is divesting its 20 per cent shareholding in E-CO Vannkraft AS (ECOV), and the consortium has acquired 65 per cent of the electricity production at the Rana power station for a period of 15 years.

The Consortium will together establish a company that acquires the shares in ECOV and the rights to 65% of the electricity production at Rana power station. EPV and KV are experienced operators and owners in the Finnish utility sector. Outokumpu is a leading international metals and technology Group.

“Buyers are well-known and respectable Finnish market participants. We believe they will be able to contribute to the company’s positive development,” says Statkraft president and CEO Bård Mikkelsen.

Statkraft has been a co-owner of ECOV since 1996. The Norwegian Competition Authority has ordered Statkraft to sell these shares.

E-CO Vannkraft AS (ECOV)
ECOV is one of Norway’s biggest producers of hydropower and has an average production volume of 9.5 TWh per annum. It owns and operates several power stations in southern Norway. In addition it has major shareholdings in three other Norwegian energy companies. The company had revenues of NOK 1.7 billion and a net profit of NOK 356 million in 2003, and has 151 employees. E-CO Energi (ECOE) owns 80 per cent of the shares in ECOV, while Statkraft owns 20 per cent. ECOE is owned by the municipality of Oslo.

The purchase price for the shares in ECOV is NOK 2,550 million. The sale of the shares in ECOV gives the Statkraft Group a book gain before tax of almost NOK 300 million. This gain will be entered in the accounts for the quarter when the agreement is executed.

The agreement, which has been approved by Statkraft’s board of directors, is subject to approval by the boards of EPV and KV. ECOE has a pre-emptive right to purchase Statkraft’s shares in ECOV and will today be offered to exercise this right. The agreement must be approved in accordance with the Norwegian Act relating to the acquisition of waterfalls, mines and other real estate. The agreement can be implemented once all the conditions have been met. The parties expect the agreement to come into force by the fourth quarter of 2004 at the latest.
 Rana power station
Rana power station in the Norwegian county of Nordland has installed capacity of 500 MW and an average production volume of approximately 2 TWh per annum.

For a period of 15 years from 1 January 2005, Statkraft’s contracting party has all the rights and obligations relating to 65 per cent of the capacity of Rana power station. Statkraft will operate the power station and its relationship with the employees will not be affected by the agreement.

With the exception of the time limitation of 15 years, the agreement is structured broadly in the same way as normal co-owner contracts. Statkraft’s contracting party will thus bear the hydrological risk, as well as risk related to operations and tax issues.

Statkraft will receive NOK 2,200 million when the agreement comes into force and will enter this income in its accounts over the contract period. The buyer will also pay an annual amount of NOK 65 million to cover the power station’s operations and maintenance.

The agreement, which has been approved by Statkraft’s board of directors, is subject to approval by the relevant boards of the buyers.

Statkraft wishes to be a leading European player in the field of environmentally friendly energy. Based on more than 100 years of knowledge and investments, the Group is well equipped for further growth and development – and has a clearly stated desire to create permanent added value.  Statkraft stands for sustainable development in both an environmental and a financial sense. Statkraft produces a total of 42 TWh per annum, making it the third largest producer of electricity in the Nordic region and the second largest producer of renewable energy in Europe. The Group has approximately 2,000 employees, including those in Skagerak Energi and Trondheim Energiverk. Statkraft also has ownership shares in BKK, Agder Energi and Fjordkraft – as well as in Sweden’s Sydkraft.

The Kymppivoima group (KV)of business companies is owned by eight Finnish regional energy companies: Kymenlaakson Sähkö Oy, Pohjois-Karjalan Sähkö Oy, Savon Voima Oy, Suur-Savon Sähkö Oy, Iin Energia Oy, Oulun Seudun Sähkö, Rovakaira Oy and Tornionlaakson Sähkö Oy. Over 100 municipalities are currently owners of these regional energy companies. KV’s power production capacity is 450 MW. It is, among other shareholdings, the third largest shareholder of Pohjolan Voima Oy (9.0 %). In 2003, the turnover of the Kymppivoima companies totalled EUR 175 million, electricity procurement  5,000 GWh of which own electricity production was 1,500 GWh.

Etelä-Pohjanmaan Voima Oy (EPV)is owned by 21 Finnish regional energy companies which are mainly owned by municipalities. EPV is a power procurement company for its shareholders, operating according to non-profit principle. EPV acquires most of its power from the energy production companies it owns directly. EPV’s most significant shareholdings include Teollisuuden Voima Oy (6.6 %), Pohjolan Voima Oy (7.6 %) and Vaskiluodon Voima Oy (50 %). In addition to this company owns and operates regional grid in the Western part of Finland. EPV’s turnover in year 2003 was EUR 70 million.