ES Vostoka considers Chinese partners for construction of Ussuriysk CHP plant
VLADIVOSTOK. May 2 (Interfax) - OJSC RAO Energy Systems of the East (ES Vostoka) is considering Chinese companies that are part of a Heilongjiang association Amur Energo-Stroi Alliance as the most likely partners for the project to build the Ussuriysk combined heat-and-power plant in Primorye.
The government of the Chinese province of Heilongjiang and ES Vostoka signed a memorandum of mutual understanding on April 30 following talks on the development of the electricity sector in Russia's Far East Federal District, the Russian company said in a press release.
Both parties noted the great potential for cooperation in construction of power facilities in the Far East.
Cooperation will focus on the Ussuriysk CHPP project, taking into account the experience of Chinese companies in construction of generating facilities and the strong potential for production modern power equipment.
ES Vostoka said China's provision of soft lending terms for the construction of the power plant could become a major consideration in the choice of the general contractor that will offer the most favourable terms for provision of financial, construction and technical services.
Chinese partners would make an effort to reduce the costs of borrowing for the Russian partner in the project, the company said.
Sergei Tolstoguzov, head of ES Vostoka, said the project was estimated at around $800 million-$900 million and that the company expected to fund 70%-80% of it with loans and the rest with its own funds, including from the sale of Far East Distribution Company.
Construction of the 370 MW Ussuriysk CHPP is part of ES Vostoka's investment program and is scheduled to be carried out in 2012-2015.
It was reported earlier that ES Vostoka plans to use some of the proceeds from the sale of 100% of shares in OJSC Far East Distribution Grid Company to the Federal Grid Company to finance the construction of Ussuriysk CHPP. The deal was worth an estimated 19.3 billion rubles.
Amur Energo-Stroi Alliance was formed in January 2011 on the initiative of Chinese businessmen, with active support from the administration of Heilongjiang and China's government. It includes 43 Chinese and international companies, including manufacturers of power equipment, construction companies, design institutes, the Heilongjiang branch of the Bank of China, and other companies.
RusHydro owns 69.316% of ES Vostoka.