Annual Report 2013 | Suomeksi |

31 Other provisions

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Accounting policies + -
Provisions for environmental restorations, asset retirement obligations, restructuring costs and legal claims are recognised when the Group has a present legal or constructive obligation as a result of past events to a third party, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as interest expense.
Environmental provisions
Environmental provisions are recognised, based on current interpretation of environmental laws and regulations, when it is probable that a present obligation has arisen and the amount of such liability can be reliably estimated. Environmental expenditures resulting from the remediation of an existing condition caused by past operations, and which do contribute to current or future revenues, are expensed as incurred.
Asset retirement obligations
Asset retirement obligation is recognised either when there is a contractual obligation towards a third party or a legal obligation and the obligation amount can be estimated reliably. Obligating event is e.g. when a plant is built on a leased land with an obligation to dismantle and remove the asset in the future or when a legal obligation towards Fortum changes. The asset retirement obligation is recognised as part of the cost of an item of property and plant when the asset is put in service or when contamination occurs. The costs will be depreciated over the remainder of the asset's useful life.
Restructuring provisions
A restructuring provision is recognised when the Group has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity. Restructuring provisions comprise mainly of employee termination payments and lease termination costs.
2013 2012
EUR million CSA
pro-
vision
Environ-
mental
Other Total CSA
pro-
vision
Environ-
mental
Other Total
1 January 178 12 24 214 180 12 17 209
Provisions for the period - 1 10 11 - 0 15 15
Provisions used -24 -2 -12 -38 -23 0 -7 -30
Provisions reversed -48 0 -9 -57 - 0 -2 -2
Unwinding of discount 12 0 0 12 15 0 0 15
Exchange rate differences -15 0 -1 -16 6 0 1 7
31 December 103 11 12 126 178 12 24 214
Of which current provisions 1) 20 0 3 23 - 6 1 7
Of which non-current provisions 83 11 9 103 178 6 23 207
1) Included in trade and other payables in the balance sheet, see note 34.
Fortum's extensive investment programme in Russia is subject to possible penalties that can be claimed if the new capacity is substantially delayed or agreed major terms of the capacity supply agreement (CSA) are not otherwise fulfilled. The remaining provision is assessed at each balance sheet date and the assessment is based on changes in estimated risks and timing related to commissioning of the remaining power plants in the investment programme. During 2013 EUR 48 million of the provision was reversed to the income statement after the finalisation of the two greenfield power plant investments, i.e. Nyagan 1 and Nyagan 2. The remaining provision for possible penalties amounts to EUR 103 million (Dec 31 2012: 178) including EUR 20 million covering the remaining penalties to be paid in 2014 regarding the delay of Nyagan 2. Paid penalties during 2013 amounted to EUR 24 million (2012: 23). The provision increases due to unwinding of the discounting of potential future penalty payments, which during 2013 resulted in an increase of the provision with EUR 12 million (2012: 15). The unwinding effect is recognised in other financial expenses.
Environmental provision relates to dismantling of buildings and structures on contaminated land. Main part of the provision is estimated to be used within ten years.
Restructuring provisions, included in other provisions, amounts to EUR 2 million (2012: 1).
Other provisions include also provisions for insurance payments, tax claims and provisions for onerous contracts. The other provisions are estimated to be used within two to five years.
Regarding provisions for decommissioning and provision for disposal of spent fuel for nuclear production, see note 30.
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