4 Oct 2019 10:20

Power Machines opposes Industry Ministry SPIC with Siemens

MOSCOW. Oct 4 (Interfax) - PJSC Power Machines is opposed to the Industry and Trade Ministry signing a special investment contract (SPIC) with Germany's Siemens for production of large capacity gas turbines in Russia, the Russian power engineering company's CEO, Timur Lipatov said.

"I believe that the time for a SPIC has passed and to sign it now would mean to put those who have seriously progressed in this process [of manufacturing large capacity gas turbines], for example us, in unequal conditions," Lipatov said at Russian Energy Week 2019.

A SPIC amounts to changing the rules of the game, he said. The Russian government earlier issued resolution that restricted participation in the program to modernize thermal power plants to power engineering companies in which foreign equity ownership does not exceed 50%. The document also contains requirements for technology transfer to Russia.

One can comply with this resolution, or one can sign a SPIC, Lipatov said. The SPIC also provides a three-year deferment from the state production starts, which is also not specified, he said. "In principle, this can be any date before the date of delivery," he added.

Siemens has filed an application to sign a SPIC. The German company is Power Machines' partner in the joint venture Siemens Gas Turbine Technologies, in which Siemens holds 65% and the Russian company owns 35%.

"What is the well-known western manufacturer doing by saying it is prepared to localize, but in reality not really. As a participant in negotiations with them, being a minority shareholder, I know all the niceties of this process. They say we're prepared to localize, but give us a SPIC. What does this mean? We're delivering the first turbine in 2022, the three years begin from this moment. 2025 comes, selection of [capacity supply agreements] concludes. However, if there was no sales market, then in general there is no provision for sanctions against them for not fulfilling the SPIC," Lipatov said.

The head of Siemens in Russia, Alexander Liberov told reporters earlier that the company is holding negotiations with the Russian government on plans to continue working in Russia, and that it also expects new regulations to be issued under SPIC 2.0.