China Huandian Power Sign Joint Venture Deal with Russia’s TGK-2

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May 26 – Chinese Huadian Power International Corporation Ltd. (HPIC) will finally have a share of the Russian power market after a long bidding process. The company has entered a joint venture with Russian regional power generator TGK-2 for a thermal electric power plant project in Yaroslavl.

Russia’s TGK-2, controlled by energy firm Sintez Group LLS, hopes that the cooperation will help reduce the cost of erecting the new plant to a modest sum, Russian RBC daily reports. At the same time, the partners will probably have to obtain official authorization for foreign partners to enter the project.

According to Sintez Group’s news-release, the foreign partner will buy 51 percent of the authorized capital of the company, founded by TGK-2 in April 2010. The further increase of authorized capital stock will come about in shared proportions for the parties, Sintez Group official specified.

The joint venture will undertake construction work while ТГК-2 will trade energy.

“If the project is recognized as a strategic one, the joint venture will need to obtain state permission for foreign partners to enter the project,” Jukov, Khrenov and Partners’ senior lawyer Svetlana Minakov said to RBC daily.

“This project seems to be very profitable,” Andrey Korolev, deputy director of Sintez Group, said while adding that the project will be co-invested by both sides and one of the Chinese banks will open up a credit line for the joint venture.

“The construction might cost about 16.2 billion rubles at a capacity of around 450 МВт, which is quite comprehensible,” UniCredit Securities analyst Dmitry Konovalov said. Meanwhile the precise price of the project will appear after the feasibility report is carried out. The company plans to commence this work at the beginning of June, while Chinese Northeast Electric Power Design Institute might be involved in the feasibility report.

“Most of the equipment will be Russian,” said Andrey Korolev. “But we probably will buy steam turbines in China, if they will be certified in Russia.”

The power plant input is planned for 2013, but the parties expect to achieve the project in 2012.
Russian regional power generator TGK-2, based in the city of Yaroslavl, owns 16 combined heat and power plants with an electricity capacity of 2,600MW and a heat capacity of 12,029 Gcal/h. The company maintains generating enterprises in six Russian regions: Arkhangelsk, Vologda, Kostroma, Novgorod, Tver and Yaroslavl.

Huadian Power International Corporation is one of the five largest state-owned IPPs in China. As of June 2009, total installed capacity controlled and invested by HPIC had amounted to 23,718 MW and the total interested installed capacity amounted to 20,556.6 MW.

1 thought on “China Huandian Power Sign Joint Venture Deal with Russia’s TGK-2

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