Utility Fortum in talks with Finnish government over liquidity

Fortum, hit hard by the energy crisis in Europe, is in talks with the Finnish state on how to secure its liquidity needs until hedged power contracts go to delivery and collateral is released. Fortum, majority owned by the Finnish government, said in a statement on Monday its standalone collateral tied up on the Nasdaq Nordic Commodities exchange, excluding that of its German subsidiary Uniper, had soared by a billion euros in just a week to around 5 billion euros by Friday's market close.

Fortum, hit hard by the energy crisis in Europe, is in talks with the Finnish state on how to secure its liquidity needs until hedged power contracts go to delivery and collateral is released.

Fortum, majority owned by the Finnish government, said in a statement on Monday its standalone collateral tied up on the Nasdaq Nordic Commodities exchange, excluding that of its German subsidiary Uniper, had soared by a billion euros in just a week to around 5 billion euros by Friday's market close. Nordic power prices last week surged to record highs, lifted by dry weather and gas supply fears in the European market.

The utility last week reported a quarterly loss of 7.4 billion euros ($7.4 billion), warned of continued heavy losses from Uniper's gas business and flagged it may have to increase liquidity reserves due to high power prices. Fortum's talks with the government are aimed at preparing the company for continued exceptional price developments in the energy market.

Finland's minister in charge of state-owned companies last week told daily Helsingin Sanomat the government had considered several alternatives should the situation worsen. Tytti Tuppurainen did not immediately reply to a request for comment on Monday.

Fortum's main exposure relates to Nordic system 2023 futures contracts. Uniper is responsible for covering its own collateral requirements. Squeezed between soaring market prices and customers' hedges, Fortum said on Monday it had also called on Nordic market regulators and authorities to take immediate action to stabilise the market.

"A default of even a smaller market participant would be difficult to manage under the current extreme price levels and could cause severe disturbances to the Nordic power system," it said. ($1 = 1.0069 euros)