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Business news, 04.09.2003 18:58

Tender Announced To Run TETS Plant

Tender Announced To Run TETS Plant Unified Energy Systems (UES) announced on Friday that it will hold a tender open to international utilities firms to chose a firm to manage one of its more modern installations, the Northwest Combined Heat and Power Plant (TETS), located in Olgino, a suburb to the west of the city.

The national power monopoly said that the managing company would be charged with overseeing an influx in investment total investment of $227 that UES says is needed to improve efficiency and production at the facility, which already supplies power to parts of St. Petersburg and the Leningrad Oblast, as well as exporting electricity to Finland.

According to the rules of the tender, which were set by UES' board of directors on Friday, the winner will be required to set up a Russian subsidiary or a joint venture in which foreign participation will be no less than 50 percent.

"The international utility company must secure funds to complete the construction of a second 450 megawatt combined-cycle gas turbine and a heating-distribution network and improve efficiency at the plant in preparation for the higher level of competition that will be introduced gradually in the Russian energy sector in the near future," the company's statement said.

The basic qualifications set out in the tender are that international utilities companies taking part must have annual revenues of no less than $10 billion, an investment rating of BBB- and higher according to either the S&P or Fitch ratings agencies, or BAA3 as defined by Moody's, experience in working in at least three other countries and a background in operating generators with capacities of no less than 10,000 megawatts.

Business daily Vedomosti quoted UES specialists as saying that there are currently only 12 companies in the world (AEP, Duke Energy, E.ON, EdF, Endesa, Enel Produzione, Fortum, RWE, Tokyo Electric Power, Tractebel, TXU and Vattenfall) that meet all of the tender's requirements.

UES said that applications will be accepted over the next four months and that a final decision will be made in December. the utility said that a contract would likely be signed by January.

Northwest TETS is 47-percent owned by UES, while another 14 percent of the shares in the plant are owned by local power utility Lenenergo, which is also partly owned by UES. The first generator at the plant was put into service in December 2000, and another three are planned, each with a capacity of 450 megawatts. According to UES, the company invested $617 million in the station between 1993 and 2001.

Jumping the gun by a day, Lenenergo General Director Andrei Likhachyov said at a press conference on Thursday that the local utility was exploring options to form a joint venture with a foreign company in order to take part in the tender

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