E.On has completed its purchase of OGK-4, one of six power generating companies being privatised by Russian utility RAO UES. The €4.1 billion deal gives the German utility its first presence in the Russian power generation market.
E.On now holds 69.34 per cent of OGK-4, which runs four gas-fired power plants and one coal-fired plant with a combined installed capacity of 8600 MW, equivalent to six per cent of Russia’s thermal generating capacity. “The OGK-4 power plant fleet is already one of the most productive and attractive in Russia and we are going to be expanding it still further in the coming years,” said E.On CEO Wulf Bernotat.
OGK-4 has a fuel mix which is typical of large-scale Russian power generators, with natural gas accounting for 80 per cent of generation. Compared with the other OGK generators earmarked for privatisation, OGK-4 has modern assets and high load factors.
Increasing demand for electricity in Russia, and in OGK-4’s area, gives E.On good opportunities for growth. In addition, OGK-4 is planning to construct some 2400 MW of additional generating capacity.
With growth rates of five per cent annually, Russia is among the world’s largest and fastest growing electricity markets. The required investment volume in the Russian electricity sector is estimated to be around $120 billion for 2006-2010, according to E.On.