Finland rejects auction for Palokki rapids as power firm dismisses €40m offer

The board of Pohjois-Karjalan Sähkö (PKS) has rejected a €40 million state offer for the Palokki hydropower plant, calling the bid less than half the facility’s true value, Yle reports.

The decision, announced Tuesday, surprised both the company’s municipal owners and the government. PKS, majority-owned by local municipalities including Joensuu, operates the dam and power station on the Palokki rapids.

Joensuu city council chair Helena Hulmi (Centre Party) attended the state’s presentation and described the offer as a solid basis for negotiations. She questioned how PKS arrived at its higher valuation and urged further talks.

Jari-Pekka Punkari, a negotiating official at the Prime Minister’s Office, said the state’s bid was based on a February share transaction and a precise analysis. He confirmed the government will not raise its offer to enter a bidding war.

“The state cannot start an auction. We must justify the price we offer,” Punkari said.

The state aims to dismantle the Palokki plant and restore the rapids to support endangered salmonid populations. The project would be Finland’s largest river restoration if realised.

PKS CEO Tuure Aho defended the rejection, stating the offer undervalued the plant’s future market performance. He denied longstanding opposition to the project, insisting the dispute stems from differing assessments.

A February share sale by Broman Group, which acquired 1.7% of PKS for €4.1 million, valued the entire company at roughly €240 million. With Palokki accounting for about 15% of PKS’s hydropower assets, the state considers its €40 million bid justified.

Municipal owners will discuss the matter in mid-August, with a final response expected by the end of the month.