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EBRD agrees to acquire minority stake in Russian regional power generating company TGK-9
€140 million investment supports privatisation in final phase of power sector reform
The European Bank for Reconstruction and Development has signed a share purchase agreement to acquire a minority equity stake in TGK-9, a regional generating company powering some of Russia’s key industrial areas, as part of a privatisation process set in motion under the third and final phase of the country’s power reform.
The EBRD investment of approximately 5.1 billion roubles (€140 million) will enable the company to finance energy efficiency improvements that will include a 66 percent increase in electricity production and a 10 percent increase in heat output thanks to the replacement of inefficient and obsolete capacity.
For the EBRD, which has been involved in the unbundling of the power sector since the start of its restructuring in 2001, this is a milestone equity transaction allowing the Bank to set a standard for private investment in the Russian power sector, said the EBRD’s Director of Power Energy Utilities team Nandita Parshad.
As part of its agreement with the Bank, TGK-9 will adopt an environmental policy, as well as a corporate governance policy.
The EBRD stake will be purchased from Integrated Energy Systems (IES), one of the largest strategic investors in the Russian power sector and part of the Renova group, in a transaction aimed at supporting the switch to private sector control as the state exits from thermal generation assets. The transaction is subject to IES becoming a controlling shareholder in TGK-9.
Increasing electricity generating capacity is vital as Russia’s economic growth surges, particularly in the heavily industrialised Sverdlovsk and Perm regions and the Komi republic where TGK-9 operates. All three areas currently face a high risk of capacity shortages.
IES, already a minority investor in TGK-9, is preparing to secure control of the regional generator through a substantial capital increase. It is also due to acquire shares previously owned by the Russian state through RAO UES.
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