Volga Territorial Generation Company» on the Basis of 2009 Fiscal Year Results
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Of the Open Joint Stock Company «Volga Territorial Generation Company» on the basis of 2009 fiscal year results Diadem VOLGA TERRITORIAL GENERATION COMPANY ИНФОРМАЦИЯ ОБ ОБЩЕСТВЕ И ЕГО ПОЛОЖЕНИЕ В ОТРАСЛИ DIADEM First acquaintance of a man with the beauty of semiprecious stones was accidental. Our ascendants could have come across them at river banks or during hunting in the mountains. Amazed with their beauty people learned to mine precious stones. Later they taught themselves to reveal the beauty of the stones by faceting. Technical progress allowed to grow minerals artificially. Mankind learned to create the stones which had been previously created by nature; now we can adorn our world with hand made treasures. Investment program of IES is called the Diadem, each project holds the name of some mineral. The projects, being implemented in the regions of Volga TGC presence are called Volga Agate, Selenite, Silica and Jasper. Volga SYZRAN TPP Agate VOLGA TERRITORIAL GENERATION COMPANY ИНФОРМАЦИЯ ОБ ОБЩЕСТВЕ И ЕГО ПОЛОЖЕНИЕ В ОТРАСЛИ IN SECTION: Address to the shareholders General information, position of the Company in the branch Volga AgateSYZRAN TPP Volga agate was discovered near Samara by the German naturalist Peter Simon Pallas in 1769, during his expedition authorized by Empress Catherine the Great. «In the gullies and brims there are many flint stones, among which eyes meet patchy red nicely colored agates», – he wrote in his work «Travel up provinces of Russia». Volga agate is flint in limestone, created on the bottom of ancient sea of silicon earth particles and desma about 250 million years ago. This semiprecious stone is one of the singularities of the Samara area. Project description: Commissioning: Syzran TPP. Construction of 200 MW CCGT TPP 2011 Objective: reconstruction of Syzran TPP with creation of replacement capacity, Capacity: growth of technical and economic indicators of the power plan, cost 225 MW reduction of thermal and electric power generation Station Syzran TPP was the first power plant in Europe running on shale. Decision Installed thermal on Syzran TPP foundation was made in 1939, but the construction of capacity – power plant was interrupted by the Second World War. Only after the 1229.3 GCal/h war the construction continued and on December 31, 1947 the first turbine generation unit was commissioned. Initially the main power source of Syzran was fuelled with shale, mined at Kashpir field. The Installed electric landmark was the power plant transfer to natural gas in July 1983. capacity – Further abandonment of shale fuel minimized environmental impact of 255 MW the power plant. Currently Syzran TPP supplies electricity and heat to the industrial consumers and inhabitants of Syzran. The Power plant is still in the process of development: implementation of the largest Volga TGC investment project – Volga Agate is being performed at the TPP site. Commissioning of new facilities will provide for power supply to the center of Syzran, which will improve the environment by closure of more than 50 small unprofitable boiler houses. ADDRESS TO THE SHAREHOLDERS ПРЕДСЕДАТЕЛЯ СОВЕТА ДИРЕКТОРОВ ОБЩЕСТВА И ЛИЦА, ОСУЩЕСТВЛЯЮЩЕГО ПОЛНОМОЧИЯ ЕДИНОЛИЧНОГО ИСПОЛНИТЕЛЬНОГО ОРГАНА Dear Shareholders! The previous year was one of the most difficult years of the last decade for the Volgabasin power system as a whole and for our company in particular. The jointstock company had to operate under the influence of a number of negative factors, the major of which was the global financial crisis and its impact on the region, which was expressed in reduction of consumer’s demand for the thermal and electric power, produced by Volga TGC. In 2009 Volga TGC TPPs’ and heating boiler houses’ thermal power output reduced by 2.5% (955 K Gcal.) compared to 2008, which was mainly caused by the significant loss of consumption by the large industrial consumers (OJSC «Togliattikauchuk», OJSC «AVTOVAZ», CJSC «Neftekhimia», CJSC «NK», OJSC «UAZ» etc.). Electricity production by Volga TGC also reduced by 6.9% compared to 2008 and amounted to 20271.0 mln. kWh. The reduction of demand for the Company’s product was accompanied by further growth of consumer’s debt for the received energy. As of 31.12.2009 the debt of the thermal energy consumers (mainly in the sphere of Ulyanovsk and Saratov public utilities) amounted to RUR 5.281 billion. The substantial role in this negative tendency was played by the lack of reasonable norms of heat consumption of Saratov and Ulyanovsk population. It can be stated that the problem of restraint of consumers’ debt as a result of discrepancy between the consumption norms and its realistic values by the end of 2009 was partially solved only in Saratov due to fitting of most of the city buildings (over 90%) with the thermal power accounting meters. The Board of Directors and the management of the Company had to implement the operating cost saving program in conditions of substantial deficiency of cash received by the management company (CJSC «IES») for the thermal energy supplied to consumers. This program included activities in Volga TGC repairs program priorities correction and manpower optimization. In the reporting period the net profit of the Company amounted to RUR3 669.6 mln and increased by RUR3 405.2 mln. compared to 2008, however it is necessary to note that this figure is mainly «on paper», because it was not secured with real money receipt from the consumers. Moreover, the substantial growth of this indicator in comparison with the previous reporting period was caused by the fact that accounting the supplied energy and having no opportunity to receive payment for this energy and allocate it to any production purposes, the Company is enforced to credit this actually missing cash to the net profit account. However it should not be right to qualify 2009 as the explicitly negative year for Volga TGC. A lot was done in the reporting period for the Company investment program implementation and the generation equipment renewal. The project of turbine unit No 1 PT12 replacement at Samara GRES (Selenite project) was successfully completed. The largescale project of 200 MW CCGT unit construction at Syzran TPP (Volga Agate project) is being successfully implemented. Purpose of this project is increase of power and economic efficiency of Syzran TPP, a branch of Volga TGC, with increased combined cycle electric power output. Within the period to date a lot of approvals have been obtained and approved, significant quantity of the generation equipment has been supplied and installed. Works on foundation of the main building and chimneytype cooling tower as well as steel framework of the new generating unit at Syzran TPP have been performed. The «Jasper» project in Orenburg TGC, supervised by the Company in 2009 has been developing according to the plan. However, the implementation of the «Flintstone» project (technical retrofitting of NkTPP1 with 200MW CCGT unit installation) faced a number of subjective and objective difficulties, which caused certain delay of its implementation. The corporate life of the Company in the reporting period is characterized by its intensity. 16 Board meetings in absentia took place in 2009, where 159 strategic and toppriority issues were discussed. However, it should be recalled that in compliance with the decision of the Annual General Shareholders’ meeting of June 2009, no remuneration was paid to the Board of Directors elected by that meeting. The management company and the administration of the Company are facing a number of key concerns in 2010. Further implementation of top priority investment projects, increase of debt recovery efficiency, further reduction of operating and nonoperating costs and reliable power supply to good customers should be mentioned among them. In 2009 the team and management of Volga TGC proved that the Company can provide reliable and uninterrupted power supply in the most complicated conditions of the global economic crisis. In case of continuous trend of economic upturn in the regions of Volga TGC presence, the financial and production results of the company in 2010 are expected to be higher than in 2009. M.Y. Slobodin Member of the Board of Volga TGC, President of IES V.V. Dikop Executive Vice president of IES ADDRESS TO THE SHAREHOLDERS GENERAL INFORMATION, POSITION OF THE COMPANY IN THE BRANCH THE COMPANY Volga TGC is one the largest power pools of the European part of Russia, HISTORY situated in MidVolga area on the territory of Samara, Saratov and Ulyanovsk regions. Volga TGC carries out stable power supply to electric power consumers as well as heat and hot water supply to industrial and municipal consumers in the largest cities of Samara, Saratov and Ulyanovsk regions, with total population over 7 million people. The largest consumers are the enterprises of chemical, petrochemical, metallurgical, automotive and building industries. Open jointstock company Volga TGC was founded in accordance with Samara, Saratov and Ulyanovsk power systems restructuring program that was approved by the Board of RAO UES of Russia on 03.09.2004. Volga TGC was established by decisions of Samaraenergo, Saratovenergo and Ulyanovskenergo general shareholders’ meetings in 2005. Following the AOenergos’ general shareholders meetings decisions, generation and thermal assets of these companies were transferred to the balance of Volga TGC; the Company started operations on 1.01.2006. Alongside with power capacities of Samaraenergo, Saratovenergo and Ulyanovskenergo, Volga TGC took over highly professional human resources and became the follower of history and traditions of the parent power systems. In addition, Volga TGC owns 100% equity stake of OJSC «Orenburg Thermal Generation Company», which extends the zone of the Company responsibility for heat supply to the Orenburg region as well. As of the end of the reporting year Volga TGC incorporates 15 TPPs, 6 territorial heat supply departments, motor depot and car fleet, training center and the priority investment projects branch.