Inter RAO to receive all generation capacity still held by Russia following energy reforms
MOSCOW. Oct 16 (Interfax) - OJSC Inter RAO UES will receive all shares in generating companies that remained in the state's hands following the conclusion of RAO UES Russia's reforms. These gencos include Federal Grid Company (FGC) and RusHydro , which have a market value of $3.3 billion.
Russia's Deputy Prime Minister and Chairman of Inter RAO's board of directors Igor Sechin made this proposal, which has gained the support of Prime Minister Vladimir Putin, the daily Kommersant reported citing a letter from Sechin dated October 5, as well as Putin's reciprocal resolution.
Inter RAO spokesman Boris Zverev confirmed to Interfax that this issue was currently under discussion. "Inter RAO has long worked with various assets inside and outside of Russia and has an understanding about how to manage them," he said.
In order to transfer the asset, a separate decree is planned. The plan will be implemented through an additional share issue by Inter RAO favoring FGC and RusHydro. Following that, FGC and RusHydro's stake in Inter RAO will be directly transferred to the Russian Federation. Later, if market conditions are favorable, the received generating assets could be sold.
Following the liquidation of RAO UES, FGC received 23.6% of the shares in TGK-6 , 32.2% in Volga TGK , 27.5% in TGK-11 , 18.9% in Kuzbassenergo (TGK-12 RTS: TGKL), 40.2% in OGK-1 , 9.6% in OGK-6 and 3.4% in Mosenergo , as well as small packets in all remaining gencos. RusHydro holds a 21.7% stake in OGK-1.
In addition, 14.4% in Sangtudin HPP-1 and 50% in Bashkirenergo , which are on FGC's balance sheet, will be transferred to Inter RAO, as well as 26.4% in TGK-5 and 41% in Irkutskenergo (T R S: IRGZ), which are held by The Federal Property Agency (Rosimuschestvo).
Otkrytie Finance Company puts the market value of all these assets at $3.3 billion.
OJSC Inter RAO UES is Russia's monopoly in the export and import of electricity. The company owns and manages assets inside and outside of Russia. Over 57% of the company's shares belong to the state corporation Rosatom. Inter RAO also is preparing an additional share issue that will be offered to Vnesheconombank (VE), which could receive up to 25% through the financing of investment projects.
The company's strategy stipulates that Inter RAO's capacity should increase to 30,000 megawatts by 2015. To date, the company's capacity stands at 8,000 megawatts excluding OGK-1. With the new capacity, Inter RAO's value could increase to $14 billion from its current $1.7 billion.
In addition to OGK-1, Inter RAO hopes to gain control of TGK-11.