Shareholders of Russian hydro plants agree to join giant HydroOGK

Russian hydroelectric generator HydroOGK formally announced voting results October 25 of a meeting in which shareholders of individual Russian hydropower generators agreed to the plan to unify virtually all hydroelectric generation in Russia under HydroOGK.

HydroOGK, which is being spun off in utility restructuring by former monopoly Unified Energy Systems, will unite 21 separate firms and nearly 50 conventional and pumped-storage hydropower stations. (HNN 9/13/07) The resulting company is to have total generating capacity of about 24,000 MW, making HydroOGK the biggest producer of renewable energy in Europe and second in the world only to Canada’s Hydro-Quebec.

HydroOGK officials said the unification will increase effectiveness of operational control of Russia’s waterpower potential and will enable it to boost hydro development.

HydroOGK plans to bring 22,200 MW of additional hydropower on line by 2020, doubling its generating capacity, board member Vasily Zubakin said. The 12-year strategy, adopted by the board of directors on October 19, emphasizes the development of the Russian Far East, Siberia, and the Caucusus.

Zubakin said shareholders of the individual power stations will receive roughly 20 percent of HydroOGK after it is restructured. The government will hold 60 percent, he said.

HydroOGK expects to complete the legal process to consolidate most of the generating subsidiaries by January 2008. Two remaining companies operating Irganaiskaya and Kaskad power stations are to be integrated by June 2008, the company said in a statement.

Zubakin said shareholders of the 1,200-MW Zagorskaya pumped-storage project, of which gas monopoly Gazprom owns about 30 percent, agreed, after protracted talks, to join the structure that will generate a fifth of Russia’s electricity. (HNN 7/20/07) Gazprom reportedly was unhappy with the pumped-storage plant’s valuation and the fact its stake would be illiquid while details of HydroOGK’s consolidation were worked out.

HydroOGK shares may be sold on the market by minority shareholders in the first quarter of 2008, but it will remain majority-owned by the Russian government, which sees hydropower as a strategic asset. No public offering of shares is planned.

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