Hafslund has entered into an agreement with the City of Oslo (Oslo kommune) to increase Hafslund's ownership share in Viken Fjernvarme AS from 33% to 100%.

The agreement implies that Hafslund as of 1 January 2007 take over the 67% ownership share of the City of Oslo in Viken Fjernvarme for approx. NOK 2 billion, including the relative share of profit after tax for 2006. Settlement will take place at the same date.

 

A new agreement with regards to Viken Fjernevarme's purchase of heat from the energy recovery facilities (Energigjennvinningsetaten) of the City of Oslo will further come into force from the same date. Entered supply agreement imply that the price paid by Viken Fjernvarme to the energy recovering facilities of the City of Oslo, on a yearly basis, will increase by about NOK 30 million relative to the current situation. The new agreement will be in force for a minimum of 20 years and replace the current agreement.

 

Further elements of the agreement with the City of Oslo are among others:

Hafslund by Viken Fjernvarme will increase the focus on district heating and is committed to build a new connection line from Klemetsrud (at the south border of Oslo) to the city centre of Oslo. This will connect the two district heating networks of Oslo.

The energy recovering unit of the City of Oslo is able to build a third combustion line at Klemetsrud. This will provide improved utilisation of the waste to be burned, and provide increased volume to the district heating network.

The energy recovering unit of the City of Oslo takes over the electricity production from own heating at Klemetsrud.

 

The acquisition of Viken Fjernvarme will strengthen Hafslund's energy balance and position Hafslund for increased initiatives within district heating and renewable energy.

 

Viken Fjernvarme delivers about 1 TWh of heat to approx. 3,300 customers in Oslo. About half of the heat is produced based on the energy recovery facilities of the City of Oslo.

 

Viken Fjernvarme AS was established in relation to the merger between Viken Energinett and Hafslund, where Viken Fjernvarme was de-merged as an independent company from Viken Energinett. The object of the company is to build, own and operate facilities for district heating based on alternative energy sources primarily within the borders of Oslo. The 2005 operating revenue of the company was NOK 487 million, with an operating profit before depreciation of NOK 188 million and operating profit of NOK 114 million. The total assets as of 31 December 2005 was NOK 1,223 million. Viken Fjernvarme has about 65 employees. For further information please see: www.vikenfjernvarme.no.

 

Hafslund already owns a district heating facility at Gardermoen with supply to the Oslo Airport Gardermoen and nearby industrial area. Hafslund has also entered an agreement to build a waste incineration facility in Fredrikstad (120 kilometer south of Oslo) with a volume of delivery of 250 GWh. The facility is expected to be in ordinary operation by turn of the year 2007/08.

 

The agreement to acquire Viken Fjernvarme is subject to final approval by the City Council of Oslo and the general assembly of Hafslund ASA. The agreement is further subject to approval of relevant authorities.

 

Hafslund ASA

Oslo, 4 July 2006

 

For further information:

Executive Vice President, Heat and Infrastructure, Per Kristian Olsen, tel. +47 91 82 77 09

Vice President Investor Relations, Heidi Ulmo, tel. +47 90 91 93 25