Finland hopes to persuade EU to compromise in Fingrid ownership issue

Pekkarinen would drop Fortum and PVO share in company to below 50%

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Finland is trying to push through a compromise into the European Union's energy package which would affect the ownership structure of Fingrid, Finland's electricity transmission operator.
      Minister of Trade and Industry Mauri Pekkarinen said on Monday that he will try to reach a solution under which two large electricity utilities, Fortum and Pohjolan Voima (PVO), would hold less than half of the ownership of Fingrid.
     
The European Commission demanded in September that distribution and production of electricity should be separated from each other. The aim is to improve competition in the energy field.
      If the Commission's proposal is approved, Fingrid's ownership structure will have to be renewed.
      At present, just over half of Fingrid is owned by Pohjolan Voima and Fortum. One third is in the hands of private investors, and less than one fifth is held by the state.
      The Commission feels that the dominant position of electricity producers in the distribution company is an impediment to free competition.
     
Pekkarinen said in September that the state will not buy PVO and Fortum out of Fingrid.
      In October Pekkarinen hinted at the possibility that the state might buy a majority in Fingrid if the EU insists.
      Now Finland is seeking a compromise in which PVO and Fortum would hold just under 50 per cent of Fingrid. In practice this would mean that someone or some company would buy about one per cent of Fingrid shares from the companies.
      "A pension company or institution might come into question", Pekkarinen said in Brussels on Monday.
     
However, it is not at all certain that the compromise promoted by Finland will be passed in the EU. A majority of member states support the Commission's aim of unbundling the market.
      "If pure unbundling goes through it will be a very difficult matter for us", Pekkarinen said.
      In principle, Finland also wants to increase competition, but the severe measures called for in the Commission's energy package came as a surprise.
      The Commission had previously indicated that Fingrid's ownership structure was acceptable.
     
The greatest opponents to unbundling electricity production and distribution are France and Germany, where the markets are dominated by large energy companies.
      The two big EU states refer to the inviolability of the right to ownership and energy security.


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