Fortum has announced that it is planning to increase its stake in Russian generating firm TGC-1, in a move that will result in a 60% increase in the company’s hydro portfolio.

Fortum and Gazprom Energoholding recently signed a protocol to start a restructuring process of their ownership of TGC-1, which owns and operates hydro power and thermal power plants in North-West Russia as well as heat distribution networks in St. Petersburg. Currently Gazprom Energoholding owns 51.8% of the TGC-1 shares and Fortum 29.5%.

As part of the restructuring, Fortum will establish a joint venture together with Rosatom to own the hydro assets of TGC-1, while Gazprom Energoholding continues with the heat and thermal power businesses of TGC-1. By utilising its present stake in TGC-1, Fortum would obtain a 75%+ ownership in the new hydropower company, with Rosatom taking the minority holding. The company would become a subsidiary of Fortum.

"Restructuring of TGC-1 assets will increase Fortum’s total hydro power generation by 60% to 34 TWh, which clearly demonstrates Fortum’s strong commitment to CO2-free production. As we already have more than five decades of experience in working in Russia and with Russian partners, increasing our volume of hydro power in Russia is a natural step for us", said Tapio Kuula, President and CEO of Fortum Corporation.

TGC-1 owns and operates a fleet of 40 hydro power plants with a total capacity of approximately 3000MW.

Provided the deal goes ahead, Fortum said it would also be ready to participate with a minority stake (max 15%) in the Finnish Fennovoima nuclear power project.