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6.3 billion rouble loan for renewable energy in Russia
Nine international banks join EBRD in funding HydroOGK
The European Bank for Reconstruction and Development has provided 6.3 billion
roubles (the equivalent of €185million) in long-term funding to support
renewable energy in Russia. The loan will finance a modernisation programme
which will extend by at least a quarter of a century the life of nine power
stations of the Volga-Kama cascade, one of the country’s largest sources of
hydro power.
The Bank will be the lender of record for the full amount of the loan to OAO
HydroOGK, a fully-owned subsidiary of the main Russian power utility RAO UES,
but 4 billion roubles (€117 million) has been syndicated to nine banks under
an EBRD A/B loan structure.
Co-Arrangers under the B loan are: Standard Bank PLC, Bank Austria
Creditanstalt AG, and ING Bank (Eurasia) ZOA. Lead Managers are: Calyon,
Fortis SA/NV and ZAO Raiffeisenbank Austria. Managers are: ZAO Citibank,
Credit Suisse and Banque Societe Generale Vostok.
The B loan is in two tranches, with RUB 3.15 billion (€92 million) for 10
years (provided by Standard Bank, ING, Bank Austria, Calyon and Fortis) priced
at 305 basis points over Mosprime and RUB 850 million (€25 million), provided
by the remaining banks, for eight years priced at 275 basis points over
Mosprime. The EBRD A loan is for 14 years.
In an earlier EBRD rouble syndication for the Russian power sector, six banks
last April provided a seven-year loan of over four billion roubles to
Mosenergo at a price of 275 basis points over MosPrime. The EBRD loan for
Hydro OGK sets a new record in terms of maturities for the rouble syndication
market, now stretching to 10 years for the first time.
The total cost of rehabilitating obsolete equipment, mainly turbines,
generators and transformers, on the Volga-Kama cascade is estimated at 26
billion roubles (€764 million) and it is expected to take five years to
complete.
Hydro generation is the main source of renewable energy in Russia, providing
20 percent of all the power produced. It acts as the backbone of the power
industry, stabilising supplies and maintaining the reliability of the
country’s entire system, as well as generating economically efficient
electricity. The government has now put HydroOGK, in charge of developing all
renewable energy resources in Russia, including windfarms, tidal and small
hydro projects.
At present the development of non-traditional energy sources is insignificant
in Russia. One of the few exceptions is geothermal Mutnovskiy power plant in
Kamchatka for which the Bank provided a $100 million loan to RAO UES in 1998.
Together with the EBRD loan for the Volga-Kama cascade refurbishment, the EBRD
has secured grant financing to develop a regulatory framework for renewable
sources of energy in Russia from the Spanish government. This grant of
€165,000 will assist in the development of a regulatory framework for
windfarms in Russia.
Once the reorganisation of HydroOGK has been completed, including through the
consolidation of a large number of hydro power plants, it is due to become the
largest power generating company in Russia and the world’s second biggest
hydro generating company after Hydro Quebec in Canada – with an installed
capacity of 23.3 Gigawatts (GW).
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