Territorial Generating Company TGK-5

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TGK-5 was created on March 31, 2006 as a power generation company serving the northeast part of Russia. TGK-5 was one of 14 territorial generation companies (TGKs) that were formed on the basis of combined heat and power plants controlled by state-owned electricity monopoly RAO UES. At that time, TGK-5 had a total installed capacity of 2,467 MW and heat capacity at 9255 Gcal/h, divided in eleven plants located the regions of Kirov, Marii-El, Chuvashia and Udmurtia. The company was formed the basis of generating assets of the regional energy companies (Kirov, Chuvash, Udmurt, Marii and V’yat) by converting their shares into TGK-5 shares. In May 2007, the Board of TGK-5 agreed to issue an equivalent of 36.6 % new shares of the company. In June 2007, Integrated Energy Systems bought the 81% of the new share sold to through the IPO for US$400 million while existing private shareholders (including Integrated Energy Systems) exercised their preemptive right to buy new shares and acquired the remaining 19% of the new shares for US$50 million. After the IPO, RAO UES saw its stake in TGK-5 declined from 64.83% to 47.45% while Integrated Energy Systems (IES), one of the largest Russian energy investors and part of the Renova group, increased its stake in TGK-5 to 41%. In September 2007, the RAO shares in TGK-5 were transferred to its existing shareholders proportionally to their ownership in RAO UES. After this transaction, the state-owned Federal Property Agency (Rosimushchestvo), owned 25% and Gazprom 5%. In October 2007, Integrated Energy Systems (IES) increased its stake in Territorial Generating Company N5 (TGK-5) to 46.125% by acquiring shares from minority shareholders. Over 2003-2007 period, the Russian power sector underwent significant restructuring. Until 2003 the main assets of RAO UES, the state-owned holding for energy companies, were united into regional vertically integrated energy companies: 73 regional power utilities or Energos which produced and transmitted electricity and heat. RAO UES also centrally managed 32 Federal Power Plants, the Central Dispatch, High Voltage Grid plus Grid Service. 2003 energy sector reform envisioned a new organizational structure that included companies involved in potentially competitive activities (power generation and sales, repair and services) and natural monopolies (transmission, dispatching). As a result of the reform RAO UES was planned to be dissolved on July 1, 2008. The companies replacing RAO UES were: a System Operator was to receive functions and assets of regional dispatch administrations; a Federal Grid Company (FSK) was to manage the trunk grids; 11 interregional distribution grid companies were to manage regional distribution grids; RAO Eastern Energy Systems Holding was to manage energy companies of the East and isolated power systems of the Far East region; six wholesale generation companies (OGKs) were formed on the basis of large federal plants; one Hydro OGK was to manage large hydro plants; 14 territorial generation companies (TGKs) were formed on the basis of combined heat and power plants and Inter RAO UES was to remain the major investor and a leading exporter and importer of electric power in Russia. Rosenergoatom was to include all nuclear power plants. Wholesale generation companies (OGKs) were formed in 2004-05 on the basis of large federal power plants with a typical installed capacity of 1000-2000 MW. These large power producers were to become the largest participants and the main competitors on the wholesale power market. Seven of such companies were created in the process of reform: six of them incorporated large thermal power plants (OGKs) and one incorporated large hydro power plants (Hydro-OGK). In an effort to restrict the monopoly influence on the competitive wholesale power market, each of the OGKs was established on the basis of power plants geographically dispersed across the country. The reform also created Territorial generation companies (TGKs) by uniting combined heat and power plants with a typical installed capacity of 100-500 MW which were located in a few neighboring regions or one macro region. The territorial generation companies would sell electricity as well as supply regional consumers with heat energy. Interregional Distribution Companies were formed as operating companies to manage electricity distribution networks located in a number of neighboring regions. As of September 2011, the shareholders were "Depository Clearing Company" (nominee, 30.35% ), "Sberbank of Russia" (nominee, 26.27%), Russian Federation through the Federal Agency for State Property Management (25.09%), "Gazprombank" (nominee, 5%), Other legal entities (9.66%) and individuals (3.63%). As of end 2011, OAO "TGC-5" was composed of 11 thermal power stations. The installed power capacity - more than 2400 MW. utility website http://www.tgc5.ru/rus.html shareholder structure http://www.tgc5.ru/kapital_rus_struct.html Ies holding http://www.ies-holding.com/generationural.html