The Norwegian government has vetoed the sale, by UK-based global major industrial technology group Rolls-Royce, of its Norwegian subsidiary company Bergen Engines to Russian locomotive and railway equipment manufacturing and services company TMH Group. Rolls-Royce Bergen produces medium speed diesel and gas engines ranging from 1 400 kWe to 11 830 kWe. It can also provide integrated modular power plant solutions, turnkey installation partnerships, power plant design and project management services, plant operations experience and long-term service agreements, and export finance.

Rolls-Royce Bergen also produces engines for marine applications, but these are exclusively distributed and sold by another Norwegian company, Kongsberg Maritime. This enterprise is itself a division of Norway’s Kongsberg technology group. (Another division of which is Kongsberg Defence & Aerospace, which is Norway’s number one defence and aerospace company.)

Rolls-Royce was disposing of Bergen as part of its restructuring programme to help it deal with the effects of the Covid-19 pandemic. It had agreed to sell the Norwegian company to the Russian group for €150-million (about $180-million). Rolls-Royce Bergen generated revenues of £239-million in 2019. 

“We followed the appropriate process in contacting the authorities in advance of the announcement of the sale on 4 February 2021,” said Rolls-Royce in a statement released on Tuesday. “We have cooperated with the government’s subsequent review by pausing the sales process and believed we had identified a new owner willing to invest in the business and its people for the long-term. We await formal legal notification by the Norwegian government.”

“Today’s (Tuesday’s) announcement will cause significant uncertainty in Bergen Engines, which employs more than 900 people worldwide including 650 in the main factory in Hordvikneset,” added the UK group. “We will be seeking the assistance of the Norwegian government to swiftly find another option, which can provide Bergen Engines and its people with the investment required for the future and Rolls-Royce with an appropriate outcome.”

The deal has been blocked on national security grounds. ”The technology possessed by Bergen, and the engines it produces, would have been of significant military strategic interest to Russia, and would have boosted Russian military capabilities,” explained Norwegian Justice and Public Security Minister Monica Maelan. Russia has only a very limited capability to design and manufacture marine engines; under the Soviet Union, nearly all such capability was concentrated in Ukraine, which has refused to supply engines to the Russian Navy since Russia seized the Crimea in 2014.