E.ON reported that STS has a number of shareholdings in power generation and distribution in Russia, and supplies electricity and gas to about 1.1 million customers in western Siberia.
STS intends to transfer some of its own generating capacity into the new joint venture, but the companies are also planning to participate in the privatization of Russian power producer TGK-10 in order to expand E.ON-STS Energia’s presence.
As part of the joint venture, STS will transfer some of its generating capacity to TGK-10, before E.ON-STS Energia acquires a majority stake in the company. TGK-10 is intending to build about 1,000MW of new generating capacity over the medium term.
TGK-10 is being privatized as part of the market liberalization that Russia’s wholesale power sector is set to undergo. E.ON said that this market overhaul would create an attractive business environment for investments in power generation, in both improving efficiency and constructing new generation capacity.
The German utility said that Russia is currently one of Europe’s largest and fastest growing electricity markets, with annual growth of 5% to 6%. In addition, the region’s electricity industry is estimated to require annual investments of more than $20 billion over the next 15 years
E.ON’s long-term objective is to establish a strong position in Russia’s fast-growing industrial regions in the Urals, western Siberia, Volga, and central Russia.
