The Russian energy sector turns to China

For the first time since the days of Chubais, after the reform of RAO UES, the Russian energy comples may have a foreign strategic investor. 
Origin source
TGK-2 shareholders, producing electricity and heat in the more central regions of the country, negotiating the sale of control of the company Huadian Corporation of China, told Forbes, General Director of JSC "TGC-2" Andrey Korolev.

TGC-2 - it is still recently considered to be the largest bankruptcy Heat Energy Company of northern Russia, the company which are located in six regions of the country. Shareholders are prepared to get rid of its assets in two areas - the Kostroma and Tver, and control of enterprises in the four remaining sell Huadian. Thus, TGC-2 can become the first company in the list of major Chinese energopriobreteny in Russia. "Turning to China" is being implemented in the energy sector.

The Chinese have long been eyeing the TGK-2, a member of the group "Synthesis" senator from Chuvashia Leonid Lebedev. In September 2010, within the framework of the visit of Dmitry Medvedev, then president of Russia, China signed a memorandum of cooperation - he sealed relationship TGK-2, the Huadian and Industrial and Commercial Bank of China Jiang (ICBC). Huadian - one of the five largest generating companies PRC, sozIt is given in 2002 during the reform of China's electric power industry. The installed capacity of power plants - 77.5 watts. This is about 35% of installed capacity, for example, Russia.

"Relations between Russia and China are experiencing a period of prosperity," - said Medvedev then pleased.

Little did he suspect that this cooperation will lead to the fact that in 2014 the Chinese can become major shareholders of the entire TGK-2.

By the end of 2011 on the basis of the memorandum was formed a joint Russian-Chinese enterprise LLC "Huadian Teninskaya-CHP", its founders were TGK-2 and Huadian. The station is 450 MW with a complex for Russian language naming Yaroslavl has a residence permit and is worth about 20 billion rubles. 30% - own funds Huadian, 70% - project funding from ICBC.

Upon completion of construction the Chinese get control over the largest in the Yaroslavl region of modern thermal power plant, a member of TGC-2. And along with it - the opportunity to receive a return on investment through capacity payments guaranteed by the station. "Against the background of complications partnership relations with Western countries, it is with the Chineseand corporations is the most priority ", - said the representative of TGC-2.

Now shareholders "Synthesis" is negotiating with Huadian about the possibility of acquiring strategic control in producing electricity TGC-2 assets, said Andrey Korolev. According to him, "VTB Capital" has made a rating of "all business units," and handed it to Huadian. "It is a question of whether the risks, and purchase intent {} has not discussed whether the rate of profit is large enough and suitable," - he stressed.

The parties are discussing the establishment of joint ventures in four areas of activity of TGC-2 - Novgorod, Vologda, Arkhangelsk and Yaroslavl regions. Option, which would fully accept the Chinese side, - transfer it a controlling stake (51%) in the framework of the joint venture, said Korolev. For Russian companies it is acceptable, but not the only option, said a spokesman for TGK-2. In most Huadian questions not answered Forbes.

A month ago, TGK-2 has been the focus of financial scandals.

In late 2013 I made a technical default on TGK-2 onigatsiyam, was forced to pay a penalty for delay (more than one year) Input Vologda CHP and was saddled with a high debt to "Gazprom". Market participants threatened the company's bankruptcy, the more so because of the debts for gas it has criticized Prime Minister Dmitry Medvedev.

Guide TGC-2 to go into business restructuring. As of April 1 this year, the total debt load of TGC-2 was 26.6 billion rubles, the balance of foreign exchange in the first quarter - 47.5 billion rubles. Sale of unprofitable assets continues. CHP boiler and backbone networks, which are in the Tver region, TGC-2 "give" to the municipality, and businesses in the Kostroma region it intends to sell in parts. The buyer at Kostroma CHPP-1 has already been found - a fund Spring, Korolev said. Spring really is considering the purchase of this asset for the benefit of "Group communal services", Forbes confirmed leader David Hearn Fund.

"But the object has ceased to cause damage, you will need to invest, without exaggeration, a few billion rubles", - said Hearn. "TGC-2 came out with a pre-bankruptstanding, but the value of all its assets is low, the head of the electricity department of "VTB Capital" Michael Rasstrigin: depending on the structure and lots of debt, he evaluates all TGC-2 is 5-10 billion rubles. According to Andrey Korolev, TGK-2 counts due to the transaction to pay off debts and "hoping to earn something." Huadian has great financial capacity, so a partnership with it attractive for TGK-2, said the representative of TGC-2.

In negotiations with China the past few months in many areas, which lasted for years, has accelerated the Russian side tried to quickly conclude an agreement, says the expert of the Center for Analysis of Strategies and Technologies Vasily Kashin. The most famous example - gas deal "Gazprom" with CNPC, which was negotiated 10 years. But there are more than 40 other contracts and memoranda discussed for years before and signed during President Putin's visit to China. According to Kashin, new high-profile events is expected in November, when Putin will have another visit to China.

Together with the China Energy-daclearly interested in other companies, including "Evrosibenergo" and En + Oleg Deripaska, "RusHydro". Now "RusHydro" considering the possibility of the development program of small hydropower stations in 18 regions of Russia and in China. "We do not exclude the possibility of the development of this process, together with the Chinese provided economic benefit", - said the representative of "Rugsidro". Another project - development Erkovetskogo coal deposit and construction of the largest thermal power plant of the world capacity of 5-8 GW - Erkovetskoy TPP - for export to China 30-50 billion kW / h per year, which is scheduled to go "Inter RAO" in cooperation with China.

According to Vasily Kashin, a lot on the issue of cooperation with the Chinese dependent on the development of the situation in Ukraine - new negative developments encourage Russian companies to protect themselves, including by means of reorientation of China or selling the company's business in that country. All the more so between the States concluded an agreement on trade in national currencies - to pay for new acquisitions will be Chinese and Russian rubles.
<br /> The representatives of the Ministry of Energy and Deputy Prime Minister Arkady Dvorkovich in charge of the energy dialogue between Russia and China, declined to comment.