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New ban may significantly slow Fortum's withdrawal from Russia

A proclamation by Russian President Vladimir Putin bans entities from "unfriendly countries" from trading in shares and stocks of companies operating in the Russian financial or energy sectors.

Fortum announced its intention in May to withdraw from Russia in a "controlled manner". Image: Roni Rekomaa / Lehtikuva

Russian President Vladimir Putin signed a proclamation last Friday that could be used to block the sale of Finnish energy company Fortum's Russian operations for a protracted period of time.

The decree bans entities from "unfriendly countries" from trading in shares and stocks of companies operating in the Russian financial or energy sectors.

In practice, it temporarily blocks the sale of companies, according to Jaana Rekolainen, CEO at the Finnish-Russian Chamber of Commerce.

The ban is in force until the end of this year.

Putin's move will likely delay Fortum's exit process and make it more complicated, Rekolainen added.

While the Russian government is due to draw up a more detailed list of companies affected by the ban within the next 10 days, Rekolainen said that Fortum will almost certainly be included.

As reported by Russian business daily Kommersant, the Russian government put an end to Fortum's plans to sell its businesses as early as July. The same decision was taken regarding the sale of the business of Italian energy company Enel, according to the newspaper's sources.

The reason for the freeze was a decree issued by Putin in the spring, Kommersant reported, according to which the owners of foreign energy companies need special permission to sell their holdings.

Fortum and its subsidiary Uniper have 12 power plants in Russia.

Fortum announced its intention in May to withdraw from Russia in a "controlled manner".

Kommersant reported (siirryt toiseen palveluun) in June that Fortum was collecting takeover bids, with Russian energy companies such as Gazprom and Inter RAO seen as potential buyers.