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Before modernization

After modernization


On February 24, 2010, Prime Minister of Russia Vladimir Putin held a meeting at the Sayano-Shushenskaya Power Plant in Khakassia to consider the national investment programme for generating electricity. Here are excerpts of what he said:

We all talk about improving the climate for business investments, about formation of a normal market environment, including the electrical energy sector. But such a civilized market implies mutual responsibility.

By the way, the Government feels this responsibility, and meets all of its obligations. I can inform you that today I signed a decree to allocate Rb. 53 billion for construction of nuclear power plants.

The Government has clearly stated its plans to liberalize the energy market, to set transparent and predictable rules there. And it meets its commitments.

Today I have also signed a decree that defines the principles of the long-term energy market.

This arrangement ensures conditions for stable and profitable operation and for repayment of investments of generation companies. The new arrangement is advantageous for those who want to develop and strengthen their competitive position in the market.

But I want to be absolutely clear: the right to benefit from the long-term energy market was earned by only those companies that are strictly meeting their obligations before the government, those that invest into construction of new facilities, modernization, safety.

There are companies that stick to their word. And right now we are ready to enter agreements with them that will legally enshrine mutual commitments to work in new conditions.

In the future, we will firmly link implementation of investment programs with access to the benefits of the long-term energy market and the possibility to sell electricity at open prices.

I want to tell you with full certainty, dear ladies and gentlemen, those who abandon their responsibilities and don’t want to assume commitments – please turn to Mr. Novikov (S.G. Novikov – head of the Russian Federal Tariff Service) to regulate tariffs.

So I’ve checked who meet their commitments – those are either state-owned companies (Gazprom, Inter RAO UES, RZD), or foreign companies – our major foreign investors (Fortum of Finland, Enel of Italy, E. ON of the Federal Republic of Germany). There is, however, one major private company, LUKoil – it also works in full.

And our other private investors have in fact fled. What kind of work is that? This is your civilized market, and this is the responsibility of business.

I want to say straight away so that no one is offended: those who “eat” the resources intended for investments, and all the more those who pull the funds away – such colleagues will be penalized. The state has all the necessary legal basis for that. Among other things we have the authority of the General Prosecutor’s Office, especially when it comes to technical safety…

What I would like to say in conclusion. I called several companies that meet their investment commitments: Fortum, Enel, LUKoil, Gazprom, RZD. But, as I said, there are those who, unfortunately, haven’t done everything necessary, everything that they had agreed to do, among other things receiving state money at the expense of additional issues. In TGK-3 the major shareholder is Mr. V.O. Potanin. TGK-2 – is accounted by the company Sintez, the main shareholder is Mr. L.L. Lebedev. TGK-4 is accounted by Onexim and major shareholder there is Mr. M.D. Prokhorov. Integrated Energy System – the major shareholder is Mr. V.F. Vekselberg…

I want to call all stakeholders without exception, regardless of any kind of difficulties, to launch this work in full. We, unfortunately, have examples when some objects – TGK-4, for instance – don’t even have operating plans. Not even plans!

The major shareholder there is Mr. Prokhorov. He feels good in economic terms, as they say in certain circles, he made some dough. He has money. He goes to different offices, and he came to me recently. I have a very nice relationship with him. He seeks various use for these funds and resources. But it is necessary to meet the commitment assumed earlier!

Another company is OGK-3. The major shareholder, Mr. Potanin, bought the company for Rb. 81.7 billion. And on an additional issue he received Rb. 81.7 billion – in fact he took a huge asset for nothing. Okay, he took a huge property for nothing, but there are also obligations to implement the investment program! Nothing has been done.

The following enquiry was telephoned and faxed to the Prime Minister’s Press Office on February 25: “ The Prime Minister mentioned examples of companies meeting their energy investment commitments at existing power plants, as well as constructing new ones; and he mentioned companies and investors not meeting them. Among the companies which Mr Putin endorsed as meeting their commitments, he named: LUKoil, RZhD, Gazprom, Fortum, Enel, E.On. The PM failed to say where Eurosibenergo, owned by Mr Deripaska is placed — on the list meeting commitments, or on the list failing to do so. Given the history of long delays at the new Boguchanskaya power plant, and also the role Rusal plays as the largest consumer of electricity at Sayano-Shushenskaya, it would appear EurosibEnergo is on the list of companies not quite meeting their commitments. Please clarify…”

The same question was put to the Minister of Energy, Sergei Shmatko.

Eurosibenergo, a unit of Deripaska’s Basic Element holding, describes itself as “Russia’s largest private energy company with a share of the overall electricity generation in excess of 8%.

The power plants of EuroSibEnergo have a total capacity of 19.5 GW, of which 15 GW are generated at the country’s largest Krasnoyarsk, Bratsk, Ust-Ilimsk and Irkutsk Hydroelectric Power Plants (HPPs). The CHPs of EuroSibEnergo have a 17,570 Gcal/h thermal capacity; the open-pit coal mines produce up to 15 million tpa of coal. In 2009, the power plants of OAO EuroSibEnergo produced 82,8 billion kWh, which brings the company to the second position among the Russian electricity producers (first – the state-owned EnergoAtom concern); the HPPs accounted for 83% (68.9bn kWh) of the total production. The most important electricity consumers of OAO EuroSibEnergo (~50%) are the aluminium smelters of UC RUSAL.

The EuroSibEnergo’s assets include controlling stakes in OAO IrkutskEnergo (including VostSibUgol Company) and OAO Krasnoyarsk HPP; it also owns Avtozavodskaya CHP (580 MW), energy traders ZAO MAREM+ and ZAO VolgaEnergoSbyt, and engineering company OOO EuroSibEnergo-Engineering. All these assets were previously managed by OOO EuroSibEnergo.”

There has been no reply from the Prime Ministry or the Ministry of Energy.

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