Striving to achieve greater financial and strategic flexibility, Vattenfall in a statement said: "The new structure will allow the regions to focus on their respective core issues and will open up opportunities for risk-sharing in Vattenfall's continental operations over time." The split will come into effect in 2014.
"Vattenfall is also writing down 29.7 billion of the value of the company's assets as a consequence of market development and higher business risks."
About half the impairment is related to coal and gas power plants in the Netherlands.
Like other European energy producers, Vattenfall is affected by the increasingly gloomy market prospects.
"The company now makes the assessment that the market will not recover in the foreseeable future," the company stated, adding that the writedown would not affect the company's cash flow.
The writedowns have been made across its assets, shearing 14.5 billion kronor from the value of its gas and hard coal-fired power plants in the Netherlands, 4.1 billion off hard coal-fired power plants in Germany, and 2.5 billion off combined heat and power plants in the Nordic region. Another 8.6 billion has been lobbed off other components to the business.
"The impairments are significant and this is obviously a difficult task. But this is the reality we are facing and we have to react according to what we know about the marketplace today," said Vattenfall's Chairman Lars G Nordstrm and CEO Oystein Loseth.
"We have to take steps that we deem are necessary to ensure in the long term a sustainable and strong Vattenfall."
The company also announced that it would continue its cost-cutting and streamlining, while putting its investments on a diet - reducing them to 105 billion kronor from 135 billion up until 2017.
"Investment projects already approved will be prioritized with a continued focus on renewable energy."
Swedish commentators reacted with shock to news of the writedown, though the company stressed that it was still operating at a profit.
The business daily Dagens Industri stated that the decision would axe 24.5 billion kronor of profits, due to the tax implications of the writedown.
The leader of the Swedish opposition has urged the government to appoint a crisis commission to probe energy giant Vattenfall's purchase of Nuon, which after Tuesday's writedown is worth 42 percent of its original price.
The government, on its part, said it was too early to assess the Dutch outfit's true value and whether it was a sound investment on the part of Vattenfall to buy it in 2009.
"With the information that we have today, it is clear that it was a very high price. Whether it was a good or a bad deal, however, that we'll have to evaluate in the long term," Sweden's Financial Markets Minister Peter Norman told the media on Tuesday.
"The price was, however, at that point, in line with other business deals, and was backed up by external reviewers."
The 2009 purchase made Vattenfall one of the three biggest electricity generators in the Netherlands. But three years on, most of Tuesday's writedown arose from the company's Nuon operations, where many observers have said it overpaid for its Dutch subsidiary.
Norman underlined that the government had nothing to do with the board of the state-owned company's decision to buy the Dutch power company, although credit raters Moody's noted in 2011 that "the Swedish state exercises long-term active ownership over the company and views value creation as a paramount goal for Vattenfall".
Norman pointed out that then Enterprise Minister Maud Olofsson had decided against ordering a review of the board's decision. In addition she had opted not discuss the issue with other cabinet colleagues or with the other leaders of the four-party ruling coalition.
Social Democrat leader Stefan Lfven said Tuesday's writedown made the need to properly investigate the decision-making process more pressing than ever.
"They are incredibly big writedowns, so of course it's serious, and the question of Nuon becomes relevant again," Lofven told the TT news agency.
"It's obvious to me that the government is trying to skirt responsibility, they're trying to dodge the question and have tried to put the lid on the whole thing. But it is the government, and by extension the head of the government, which is responsible for this deal."
Lofven said Norman's claim that the rest of the government had not been consulted appeared to contradict a previous statement to the parliamentary committee on constitutional affairs, in which the government had stated that it had approved the purchase.
Source: http://www.myanmarnews.net/index.php/sid/216014642/scat/3a8a80d6f705f8cc
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