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EBRD takes stake in Russia’s OGK-5 wholesale generating company
Investment in sector’s first international public offering reaffirms Bank’s support
The European Bank for Reconstruction and Development has thrown its weight
behind a landmark first international public offering by one of Russia’s six
wholesale generating thermal companies by acquiring a minority stake in OGK-5.
This investment publicly reaffirms the Bank’s strong support for the latest
phase of Russia’s power sector reform.
The exact size of the EBRD stake and other financial details of the investment
will be made public once the allocations of shares for this offering have been
completed. The offering is part of the strategy of OGK-5’s controlling
shareholder, RAO UES, Russia’s largest power utility, to raise private funding
on the open capital market for the sector’s investment programme.
The EBRD has provided some €900 million for the Russian power sector since its
first RAO UES restructuring loan in 2001 and the Bank is proud of this
commitment to the most far-reaching reform undertaken so far in the new
Russia, said EBRD President Jean Lemierre. Our participation in this IPO sends
a clear signal to the market and should in subsequent stages help attract the
strategic private investors who are so important to this reform’s success, Mr.
Lemierre added.
The new two-year EBRD strategy for the Russian Federation approved last summer
forecast that Bank commitments to the power sector would reach €1.5 billion to
€2 billion by the end of 2008 and said the EBRD would actively pursue equity
investments in federal and regional generating companies, commonly known by
their Russian acronyms as OGKs and TGKs.
The proceeds of the offering will be used to rehabilitate OGK-5’s four main
power stations, as well as for investments in additional capacity to help meet
the growing demand for electricity in Russia. OGK-5’s plants are located in
the fastest growing regions of Russia, including the Urals, and the company at
present accounts for four percent of the country’s total generating capacity.
OGK-5 and its controlling shareholder RAO UES have agreed to sign a memorandum
of understanding with the Bank committing the company to meeting a series of
environmental and corporate governance benchmarks.
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