Government convenes municipalities over disputed Palokki power plant sale

Finland’s government will hold a seminar on Friday for the municipalities that own North Karelia Electricity, bringing the sale of the Palokki hydropower plant to a decision, Yle reports. The state wants to buy the plant and remove its dam, while the company has rejected its offer of 40 million euros.

The seminar in Joensuu will address the Palokki project. Afterward, each municipality will decide whether North Karelia Electricity should sell the plant to the state. Several municipal decision-makers expect the matter to go to a vote in their municipal government.

The event will be closed to the media at the request of municipal managers, according to Jari-Pekka Punkari, a senior government official in the Prime Minister’s Office.

Speakers will include the chief executive of Fingrid, a representative of the National Emergency Supply Agency, finance professionals, fisheries experts from the Centre for Economic Development, Transport and the Environment, and a tourism professor. The seminar will conclude with a panel discussion on options for Palokki’s future.

North Karelia Electricity, the company that owns the plant, has no speaking slot or place on the panel.

If the state acquired the plant, it could remove the dam and restore the rapids downstream. The government’s programme calls for improving conditions for migratory fish by restoring running waters. It also specifically commits the government to promoting restoration of the Palokki rapids in Heinävesi to help revive endangered fish stocks and support sustainable tourism.

Prime Minister Petteri Orpo said during a visit to Heinävesi in August that he had personally included Palokki in the government programme.

The state offered North Karelia Electricity 40 million euros for the plant in June. Its final value would be determined later through a company to be established for the purpose. The company’s board rejected the offer, saying the price was too low.

Orpo has described the offer as market-based. North Karelia Electricity chief executive Tuure Aho disagrees.

“In our view, the state’s offer is not market-based, because there is no market in Finland even for new reservoir power plants with regulating capacity,” Aho said.

Aho also noted that no tender had been organised for the plant. He said the offer included conditions that were not commercially justified.

Aho considers the company’s own hydropower production highly important to its business. He said the Palokki plant had a direct long-term impact on the company’s earnings and a significant effect on the earnings of the wider group.

North Karelia Electricity and its owner company, North Karelia Energyholding, pay dividends to their municipal owners based on their profits. The municipalities received a combined 4.59 million euros in 2025.

During his August visit to Heinävesi, Orpo suggested that the company could invest the proceeds from a sale in new energy production and thereby secure future dividends. Aho said the dividends from such an investment would be modest compared with the plant’s returns.

There is agreement that restoring the rapids downstream from Palokki would provide additional spawning grounds for fish that reproduce in running water. However, Aho rejects the claim that the lake salmon population will be destroyed if the rapids are not restored.

He said research showed that the Palokki rapids were not a natural spawning area for lake salmon, either in the 1950s before the dam was built or today. According to Aho, the area is associated with trout rather than lake salmon.