Банкеръ Weekly



The Privatisation Agency (PA) is about to set a kind of a record by postponing the final stage of the deal on the Varna thermoelectric power plant (TPP). On Monday (October 3) the PA extended for the fifth time in succession the term of negotiations with the chosen buyer, the Russian joint stock company United Energy System (RAO UES), by another 15 days. In addition to the already traditional necessity of settling technical issues, PA's motive now include objective circumstances as well, which emerged in the Varna TPP last week. According to the PA, they influence the deal directly, but the candidate-buyer has not been informed about them and time is needed in order to assess their impact on the operation of the thermoelectric power station. Practically, the postponement is due to the contract for the plant's modernization, signed on September 21, about which the BANKER weekly wrote immediately after closing it. Over the next three years the German company Siemens should supply and install automated equipment in the first three units of the Varna TPP against EUR11MN. The new delay will allow the Russians renew their attempts to lobby in front of the State Commission for Energy and Water Regulation (SCEWR) for raising the norm of capital return (set in the regulatory framework) from 12 to 18% and for cutting down the offered purchase price of EUR389MN, pundits commented. We'll recall that in end-April the Russians were preferred as the buyer of the Rousse TPP, but by a decision of July 8 the Commission for Protection of Competition (CPC) ruled that RAO UES should chose only one of the two stations. The management of the Varna TPP appealed against CPC's decision at the Supreme Administrative Court (SAC) with the motives that there was no assessment on the part of CPC of complex investment programme of the buyer, and of the commitments it will undertake for preservation of the number of working positions and for expanding production.While specifying the details for the sale of the Varna TPP, the Russians are also holding negotiations with the Ukraine for renewal of the import of electricity into Russia. RAO UES has already offered a price which is to be considered by the Government in Kiev. We have already announced our price - USD0.024/kWh, but it turned out unacceptable for the Russian side. Then we proposed that they would set a price that satisfies them, but RAO UES wanted us to do that, commented Ukraine's Deputy Minister of Energy and Fuels Sergey Titenko. Deliveries of Ukrainian electricity were discontinued on June 1, 2005. The official reason was the decision of Ukraine's national Commission for Regulation of Electricity to almost double the tariff for the export of electricity to Russia (from USD1.33/kWh to USD2.4/kWh). Unofficially, however, it is said that the price hike was in reply to Moscow's accusations about the 7.8 billion cu m of natural gas that had vanished from the Ukrainian gas depots where it was stored.

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