Lahti city council demands €7 million dividend from indebted energy firm despite financial strain

The city of Lahti is pushing its energy company, Lahti Energia, to pay a €7 million dividend despite the firm’s heavy debt burden and weak profitability, according to the company’s former board chair.

Jorma Ratia, who led Lahti Energia’s board from 2015 to 2019, told Finnish broadcaster Yle that the parent company lacks the funds to distribute the dividend. The firm’s 2024 profit of €4.7 million—boosted by a €15 million internal transfer—falls short of the payout demanded by Lahti, its sole owner.

“Lahti Energia is taking on debt equal to the dividend the city expects,” Ratia said. He calculated that the company’s actual return on capital is around 0.6%, far below the 5% expected for a firm of its size. “Theoretically, it should generate nearly €50 million annually for its owner—that’s impossible.”

Current board chair Juha Rostedt (National Coalition Party) acknowledged that dividend payments slow debt repayment but noted the city, as owner, sets the terms. “If the owner demands higher dividends, we’ll comply—but that means delaying debt reduction,” he said.

Lahti Energia carries roughly €350 million in debt from two major power plants built in the 2010s. While the city council has floated returning to larger payouts of €15–20 million, Rostedt called that unlikely. The company aims to reduce debt by the 2030s to fund future investments, though Rostedt admitted uncertainty over what energy solutions will be viable by then.

A 2024 proposal to sell a 49% stake in Lahti Energia was abandoned after a citizen petition gathered over 9,000 signatures in opposition. Ratia criticized the decision as emotionally driven, arguing the city missed an opportunity to address the firm’s financial struggles.

Lahti Energia’s 2024 financials show a group profit of €19.2 million (down from €19.9 million in 2023) on revenue of €172.6 million, with net debt rising to €356 million.