As Uniper, the company's natural gas-reliant subsidiary in Germany, is responsible for seven billion euros of the total, the parent company's requirements were estimated to be four billion euros. The requirements had gone up to around five billion euro by Friday, 26 August, due to dramatic increases in spot and futures prices.
Fortum said it has enough liquid funds to meet the current collateral requirements.
The company said it was in talks with its majority owner about arrangements that safeguard its immediate solvency in circumstances where exceptional price developments continue and the collateral requirements continue to tie up billions of euro in its assets. It said power deliveries scheduled to take place next year are some of its requirements.
The customers of power utilities operating in the futures market can ask for a security from the utility to protect themselves against the eventuality that the utility can't make the promised delivery. The collateral is defined by market prices to make sure that the customer can get the power from another supplier in the event of a delivery disruption.
The utility pays the collateral directly to the customer or to the power exchange. Once the hedged contract is delivered, the collateral is released.
Fortum has reached out to the market regulators and authorities to urge them to take immediate action to improve the market, because the default of a smaller market participant could seriously damage the power system in the Nordics.
Its performance was hindered due to the massive losses incurred by Uniper, which has had to seek alternative sources of natural gas at higher prices due to the export restrictions imposed by Russia.
These losses have now been reflected in our multi-billion scale, partly as materialised losses and partly as impairments and provisions that will materialise as losses in the coming quarters, said Rauramo.