Finland's Ministry of Trade and Industry has started negotiations expected to lead to the merger of the country's largely state-owned petroleum and electric power companies.
The ministry says there are strong economic and strategic arguments in favor of combining oil and gas firm Neste Oy, owned 81% by the state, and 100% state-owned Imatran Voima Oy (IMO).
A Neste official told OGJ that the government was concerned about Neste's plan to expand into power generation: "Ministers didn't like idea of two state-controlled companies competing destructively."
A study by the ministry this summer showed that combining the two firms would create a major Finnish company that could compete internationally as European electricity and gas markets are liberalized. Neste already has a joint venture with Russia's Gazprom to import gas for subsequent delivery to Europe's gas grid (OGJ, May 22, 1995, p. 17).
The negotiations are expected to cover proposals for Neste/IMO to operate electric power plants in Scandinavia and elsewhere and to generate power within Finland for export via linked transmission grids.
"The only concrete decision so far by the ministry is that no possible combination of the two companies is being excluded," said the official, "apart from the alternative of them continuing as they are now."
Neste sees a merger as a good solution for tackling these new electricity and gas markets: "We anticipate negotiations will be completed by yearend. There are huge changes ahead."
The ministry says proposed reorganizations will have no direct effect on the structure of the management or employees of the two companies. Yet it also says one aim is to remove duplication of operations.
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