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Unified Energy System

February 24, 2004

Management Board of RAO "UES of Russia" has approved the proposals of the Tender Committee to choose a management Company to run Severo-Zapadnaya CHPP

 

Moscow, 24 February 2004. Today, the Management Board of RAO "UES of Russia" has approved the proposals of the Tender Committee to choose a management Company to run Severo-Zapadnaya CHPP (North-West CHPP) and declared the consortium of Enel/ESN Energo the winner of the tender.

Tender Conditions

Pursuant to the resolution of the Board of Directors of RAO "UES of Russia", the tender to award a Contract to run the North-West CHPP was open for international energy companies meeting the pre-qualification criteria.

– installed generation capacity (owned or under management) of at least 5,000 MW;

– turnover of at least $5 billion in 2002;

– international energy company doing business in different countries;

– investment credit rating (at least BBB according to S&P and/or Baa3 according to Moody's).

These criteria were established in order to ensure that the list of eligible bidders includes only those companies which could most efficiently run the North-West CHPP and guarantee its further development, thus promoting Russian and foreign investors' interest in the Russian energy industry. For that purpose, RAO "UES of Russia" permitted the bidders to form alliances with Russian partners, as some Russian companies have a successful experience of running energy facilities.

10 companies from Europe, the USA, and Asia have shown interest to the project. These companies received an information memorandum and contractual documentation and were given an opportunity to perform a financial and legal inspection of North-West CHPP and pay a visit to the power plant.

In order ensure that the tender is conducted in accordance with the international practice, RAO "UES of Russia" used the services of two leading international companies – JP Morgan and AkinGump – in organizing the tender.

Tender Results

RAO "UES of Russia" received two final bids: one from the consortium Enel/ESN Energo and one from Fortum. Upon thorough analysis of the bids, today, the Tender Committee evaluated the technical and financial proposals of the bidders and determined the final results. The Tender Committee recommended that the Management Board of RAO "UES of Russia" award the contract to the Enel/ESN Energo consortium, which had the best results.

After the tender results are released, RAO "UES of Russia" and Enel/ESN Energo will go over to the last stage of the negotiations to agree the final wording of the Management Contract to run the North-West CHPP, which is to be signed in the near future. It is planned that, taking into account the internal and external procedures for the approval of agreements, the Management Contract will become effective in July 2004.

Contract

The Contract to run North-West CHPP is to be made between OAO North-West CHPP and the Russian legal person, OOO "Enel ESN Energo", a subsidiary of the consortium awarded the Contract, for a term of 3 years, which may be subsequently prolonged for one more year. The Contract will be made in accordance with the Russian laws. The Management Company will perform the functions of the one-man management body (i.e. CEO) of the power plant and will be responsible for day-to-day running of the plant. An important obligation of the Management Company will be development and implementation of the plan to fund the completion of the construction of the power plant.

In accordance with the essential conditions of the contract to run the North-West CHPP approved by the Board of Directors of RAO "UES of Russia", the Management Company will assume the obligation to organize and raise financing required to complete the construction of the second generation unit at the power plant and the plant's heating main. Besides, the Management Company may not become a creditor of OAO "North-West CHPP" or acquire ownership of the property of or shares in OAO "North-West CHPP" or take part in issuance of additional shares of that Company for 5 years.

North-West CHPP

North-West CHPP is located not far from St.-Petersburg. It is the most technologically advanced power plant in Russia. The power plant uses the binary combined cycle technology and has modern equipment produced by Siemens. Currently, the plant's installed capacity is 450 MW. Work is underway to expand its capacity to 900 MW by 2006. RAO "UES of Russia" holds a 61.8% interest in OAO "North-West CHPP".

History

– On 29 August 2003 The Board of Directors of RAO "UES of Russia" approved the proposal to hold a tender, and on 26 September 2003 the Board established the pre-qualification criteria that a Company bidding to run North-West Power Plant is required to meet.

– On 1 October 2003, 30 companies meeting the pre-qualification criteria were notified of the forthcoming tender and invited to submit their bids.

– On 24 October 2004, RAO "UES of Russia" started to conclude confidentiality agreements with the 10 companies that have submitted their bids.

– On 30 October 2003, the Board of Directors of RAO "UES of Russia" approved the Essential Conditions of the Management Contract.

– On 24 November 2003, the Tender participants started a Due Diligence process at the North-West Power Plant.

– On 24 December 2003, the contract documentation was circulated to the 5 companies taking part in the tender.

– On 30 January 2004, – RAO "UES of Russia" received two final bids – from the Finnish company Fortum and OOO "Enel ESN Energo" (consortium of the Italian company Enel and the Russian company ZAO "ESN").

– On 24 February 2004, – the Tender Committee recommended awarding the contract to OOO "Enel ESN Energo".

– On 24 February 2004, – the Management Board of RAO "UES of Russia" approved the proposal of the Tender Committee on the tender winner.

Short information about participants of the final part of the tender

OOO "Enel ESN Energo":

OOO "Enel ESN Energo" is a Russian legal person registered for the purposes of the tender. Enel and ZAO ESN hold 50% interests in the Company.

Enel is Italy's leading energy company and a leader in the electricity production, transmission, and sales. Enel is one of the largest energy companies in Europe in terms of market capitalization, EUR 31.8 billion.

In 2002, The Company's sales totalled EUR 29.98 billion, and the net profit was EUR 2 billion.

In 2003, the Company's overall installed capacity made 46,500 MW.

Enel's has a credit rating of A+ according to S&P, and A1 according to Moody's.

ZAO "ESN" has a successful experience of working as the management company in one of RAO UES subsidiaries, OAO "Kolenergo", in 1999-2003.

Fortum:

Fortum, which was formed in 1998 as a result of the merger between the two Finnish companies Imatran Voima Oy and Neste Oy, is the second largest energy company and a leading producer of heat in the Nordic area.

Fortum's key lines of business are generation, transmission, and sales of electricity and heat, management and maintenance of power plants, and related services.

In 2002, the Company's sales totalled EUR 11.15 billion, with the pre-tax profit of EUR 1 billion.

The installed capacity owned or under management reached 11,090 MW.

Fortum has a credit rating of BBB+ according to S&P, and Baa2 according to Moody's.

 

 

 

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