Fortum Sells District Heating Business for $422mn

Finnish energy giant Fortum has agreed to sell its district heating business in the Jarvenpaa-Tuusula area of Finland to a local consortium for €375mn ($422mn), it said on July 3. The buyers are energy firm Vantaa Energy, infrastructure investor Infranode and local government and church pension fund Keva.

Back in January the company also sold its district heating business in Joensuu as part of a disposal process it started in June last year. The new deal is debt- and cash-free and should be closed in the third quarter, Fortum said. Its district heating operations in Jarvenpaa generated 330 GWh of heat and around 90 GWh of power.

Fortum, which earlier this year closed its major purchase of more shares in German utility Uniper, also manages district heating in Espoo, Kauniainen and Kirkkonummi in Finland, and in areas of Poland, the Baltic states and Norway. Last month it raised its stake in the Tartu district heating business in Finland from 60% to 100%, to "increase the flexibility in potential future options for the Estonian district heating businesses."

"The strategic review for the district heating businesses in Poland and the Baltics is still ongoing and proceeding according to plan," Fortum said.

Commenting, Vantaa said it had strong experience of running district heating businesses, while Keva said the investment offered "a stable, predictable and long-term cash flow."