Vattenfall has signed an agreement worth SEK33 billion to sell its lignite operations in Germany to Czech firm EPH.
The Swedish utility said that the sale marks a "major step" in its strategy to become a more sustainable energy utility, and that it also made sense financially. EPH and its financial partner PPF Investments will pay SEK15 billion cash for the sale and take on liabilities and provisions of SEK18 billion.
Under the deal, EPH and PPF Investments will take over lignite mining operations and power plants employing some 7500 workers in Germany. "EPH has proven expertise in lignite mining and is already present in Germany through its wholly-owned subsidiary MIBRAG," said Magnus Hall, Vattenfall's President and CEO.
The assets in the sale include the Jänschwalde, Boxberg and Schwarze Pumpe power plants as well as Vattenfall's 50 per cent stake in the Lippendorf power plant. The mines included in the sale are Jänschwalde, Nochten, Welzow-Süd and Reichwalde, and the recently closed mine Cottbus Nord.
"We want to reduce our CO2 exposure, so for us this is the right thing to do and it frees up resources to focus more on renewable energy," said Hall. "We see significant risks when it comes to the development of future electricity price levels. There are also regulatory risks to take into consideration."