UPDATE – Russia’s HydroOGK eyes hydro project joint ventures

An official of HydroOGK says the Russian hydropower utility is talking to a dozen foreign and Russian firms about joint plans to build mid-sized hydropower stations.

Deputy Chief Executive Vasily Zubakin said April 5 that HydroOGK hopes to sign its first joint venture deal this year. Zubakin told an industry conference his firm would control at least 51 percent of joint ventures or special purpose vehicles (SPVs) with private Russian and foreign partners.

“I think the state will in the future — after 2020 — reduce its presence not only in heating power generation, but in hydropower generation as well, except for mega-projects,” he said.

Zubakin said HydroOGK would hold a presentation for investors on April 11-12, but already has a number of preliminary agreements with Russian and foreign investors, including big Western power firms, on joint projects.

Although Zubakin did not name potential partners, HydroOGK said in November that Austrian utility Verbund, Norway’s Norsk Hydro and Statkraft, U.S. Alcoa Inc., and Russia’s newly merging aluminum giant Rusal-Sual were among companies interested in Russia’s first multi-billion-dollar tender to build new hydropower stations. (HNN 11/23/06)

Also last year, Verbund and HydroOGK agreed to evaluate possible projects in a joint working group. (HNN 11/15/06) At that time, Verbund confirmed it was interested in taking a minority stake in hydro projects of up to 49 percent.

Merrill Lynch, banks to advise HydroOGK on consolidation

HydroOGK said April 4 it has hired Merrill Lynch and two Russian banks, IFK Metropol and KIT Finance, to advise it on consolidation. (HNN 4/5/07)

HydroOGK is being spun off from power monopoly Unified Energy Systems (UES) together with other generation, transportation, and distribution assets, as the state wants to partly privatize and liberalize the sector to make it more competitive. The state wants to keep control of the company and sell up to 49 percent to investors to raise funds to help HydroOGK upgrade aging equipment and build new large stations in remote areas such as East Siberia.

As HydroOGK will group together numerous stations and assets belonging to UES and its affiliates, many of which are already publicly traded, the new giant firm will need to go through a complicated consolidation process.

HydroOGK will become the world’s second largest hydropower generation company, after Canada’s Hydro-Quebec, combining more than 50 hydroelectric stations and 23,300 MW of installed capacity.

A published interview March 22 said HydroOGK aims to list shares by the end of the second quarter of 2008 after consolidating all its assets. (HNN 3/23/07)

Vedomosti business daily quoted HydroOGK Chairman Vyacheslav Sinyugin saying HydroOGK planned investment of 329 billion rubles (US$12.63 billion) by 2011, including more than 50 billion rubles (US$1.92 billion) this year as it completes consolidation of its subsidiaries.

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