Territorial Generating Company TGK-7 (Volzhskaya TGK)

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On May 15, 2008, RAO UES of Russia accepted the offer of Berezville Investment Limited, a subsidiary of IES-Holding, for its stake in the regional power generator OAO TGK-7 (32.18%). Volga Territorial Generation Company (TGK-7 or Vologda TGK) was one of 14 territorial generating companies (gencos) that were being spun off from state-controlled power utility Unified Energy Systems (UES) as part of the country's comprehensive power-sector overhaul that started in 2001. The company was engaged in production of electric and thermal power, electric power sales at wholesale market, and in supply of heat to industrial and municipal consumers. TGK-7 had 21 power stations located in the Samara, Saratov, Ulyanovsk and Orenburg regions with a total installed capacity of 6,880 MW. Through its subsidiary Berezville Investment Limited, IES-Holding, one of the largest players emerging in the Russian electricity market, offered around US$1.15 billion for the 32.18% stake of RAO UES of Russia in the company. The offer was the only one submitted in the public tender that RAO UES carried out to sell its stake in the company. The offer was equivalent to US$456 for KW of installed capacity. Prior to the sale, IES already held a 23% stake TGK-7. Private ownership of TGK-7 was the result of the Russian voucher privatization program of the early 1990s Following the sale, RAO UES stake in TGK-7 declined from 47.46% to 15.28% giving IES a controlling stake in the company of about 55%. UES was selling its assets - including TGK-7 - as part of a wider electricity sector reform. The remaining stake of RAO UES in TGK-7 was expected to be distributed among its minority shareholders before RAO UES’s dissolution on July 1, 2008. In May 2008, RAO UES agreed to let the purchases of its shares in some of the generation and retail companies pay for them with a delay due to “the unstable situation on the world financial markets”. The payment deferment was been granted till October 1, 2009 and the deferment applied to the following companies: OGK-1, TGK-6, Volzhskaya TGK, TGK-11, Kuzbassenergo, TGK-14, Mosenergosbyt, the St. Petersburg Retail Company, and, and Tyumenenergosbyt. Over 2003-2008 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 end of December 2011, the shareholders were (the company posts only nominee shareholders):"Depository Clearing Company" (74.15%), "Depository and Corporate Technologies" (18.05%),Other (owners of less than 5% of capital)7.82% 2011 utility website http://www.votgk.com/ http://saratov.votgk.com/ Corrected project name to Volzhskaya TGK; Volgoda TGK is TGK-2 check sponsors!