2.2. Corporate profile
JSC Territorial Generating Company No. 1 (JSC TGC-1) started its operations on October 1, 2005. The General Meeting of Shareholders of the Company held on July 21, 2006 decided to reorganize the Company by merging JSC Petersburg Generating Company, JSC Kola Generating Company, JSC Karelenergogeneratsiya and JSC Apatitskaya CHPP. In November 2006, development of TGC-1 target structure has been finalized through merger of these companies.
On July 1, 2008 the Company was again reorganized by merging JSC TGC-1 Holding, established through reorganization of RAO UES of Russia, on the terms stipulated by the contract of TGC-1 Holding merging with TGC-1. As a result of that reorganization, the shares in the company held by UES of Russia were distributed among the minority shareholders of UES of Russia in accordance with the approved conversion rates, and TGC-1 Holding was split off from UES of Russia along with the simultaneous merging with the Company.
TGC-1 is the leading producer and supplier of electricity and heat in the North-West region of Russia and third largest territorial generating company in Russia in terms of installed electric capacity. The Company’s generation assets include various types of power plants (thermal, hydroelectric, diesel power plants) located in four regions of Russia: the city of St. Petersburg, the Republic of Karelia, the Leningrad Region and the Murmansk Region. In addition, the Company has a heating network of over 970 kilometres. As of the end of 2009, the installed electric capacity of TGC-1 was 6,347MW, and the heat capacity totalled 14,707 GCal/h. All electricity produced is sold primarily on the domestic wholesale market and partly exported to Finland and Norway.
TGC-1 is a strategic supplier of heat to St. Petersburg, Petrozavodsk, Murmansk, Kirovsk (Leningrad Region) and Apatity (Murmansk Region).
TGC-1’s shares are traded on the main trading platforms of the Russian stock market: on MICEX and RTS stock exchanges. On MICEX, the Company's shares are included in quotation list A1 and on RTS in quotation list B.
Major Shareholders of TGC-1 are:
- Gazprom energoholding: 51.79%;
- Fortum Power and Heat Oy: 25.66%.
Headquartersof TGC-1 is located in Saint-Petersburg. The organizational structure of TGC-1 includes The Head Office and three branches – Nevsky (covering Saint-Petersburg and the Leningrad Region), Karelsky (covering the Republic of Karelia) and Kolsky (covering the Murmansk Region). The number of personnel at of the end of 2009 was over 9,000 employees.
The supreme managing body of the Company is the General Meeting of Shareholders. The strategic and executive management of the Company is done by the Board of Directors consisting of 11 members, 4 committees of the Board and the Management Board, which is comprised of 11 top-managers of the Company. The Board and management run the Company rigorously abiding by the principles laid out of Code of Corporate Conduct, recommended by the Federal Commission of Securities Market of Russia, among which are protection of shareholders’ and investors’ rights, transparency and information openness.
Currently TGC-1 implements an ambitious investment program aimed at commissioning of new modern capacities and refurbishment/reconstruction of existing capacity. The CAPEX plan’s objective is not only to increase Company’s competitiveness as a key player of electricity and heat markets, but also to bring the production facilities of TGC-1 to up-to-date eco-standards, which should result in minimization of negative impact of Company’s operations on environment. The plan envisages the construction of over 1,600MW of electric capacity.
TGC-1’s operations are aimed primarily at efficient and sustainable development of the Company. This objective is pursued through implementation of the following tasks:
- ensuring reliable, high-quality and efficient power supply to consumers;
- improving the Company’s appeal for investors;
- improving the stability and sustainability of the Company’s business;
- growth of the Company’s revenue and profit;
- reduction of accounts receivable to improve the Company’s liquidity position;
- improvement of the Company’s management effectiveness and reduction of management costs;
- mitigation of risks related to the Company’s business activity;
- improving the Company’s appeal as an employer on the labour market.
2.3. Structural chart of the Company (as of December 31, 2009)
2.4. Significant events of 2009
January
A new hydraulic turbine of 12MW was put into operation at Volkhovskaya HPP of Nevsky Branch – one of the high-priority investment projects for TGC-1 that was started in February 2008. An up-to-date hydraulic turbine and a generator were installed at the plant, replacing obsolete generating equipment of 9MW.
The Board of Directors of TGC-1 approved the new corporate design for TGC-1 that was developed to incorporate elements of the Gazprom’s design.
The most difficult stage of implementation of one of the major projects of TGC-1's investment program in the Arctic region was completed in the Murmansk Region. A new 120-tonne power transformer was delivered to Verkhnetulomskaya HPP and installed on site.
TGC-1 has become a participant of Arena trading platform (currently called the JSC Moscow Energy Exchange). The exchange is a platform for trading electricity and capacity contracts and energy index futures contracts.
February
The Board of Directors of TGC-1 approved an increase of participation in the authorized capital of Murmanskaya CHPP up to 100% through mandatory offer to minority shareholders to purchase ordinary and preferred shares. Shareholders of Murmanskaya CHPP received the offer.
Installation of the main steam power equipment of the new generating unit started at the Pervomayskaya CHPP. An 85-tonne stator of the generator of turbine unit no. 1 was installed on
its foundation. The project provides for construction of two modern CCGTs of 180MW and 138 GCal/h each.
In the central part of the Kola peninsula, disassembling of one of the hydro generating units of Serebryanskie HPPs Cascade was completed.
A meeting of the staff of Nevsky Branch of TGC-1. Employees discussed the results of the Union Contract implementation in 2008.
March
The Board of Directors of TGC-1 decided to amend the Company’s organizational structure as follows:
- establishment of an HR management division within TGC-1 Head Office, headed by the Deputy General Director for HR;
- renaming the position of “Deputy General Director for Corporate Projects” to “Deputy General Director for Development”,
thus making him/her responsible for the Investment and Corporate Governance divisions.
Igor Dubinnikov, who was formerly the Administrative Director of “Power Machines” and Director for HR and Social Affairs of Leningradsky Metallichesky Zavod (LMZ), was appointed Deputy General Director for HR of TGC-1.
Sergey Redkin, who formerly was the head of the UES Development Department of RAO UES of Russia, was appointed Deputy General Director for Business Development of TGC-1.
Murmanskaya CHPP celebrates its 75th anniversary.
April
Boris Vainzikher, General Director of TGC-1, and the Governor of the Murmansk Region, Dmitry Dmitrienko, held a meeting in Murmansk. During the meeting Boris Vainzikher and Dmitry Dmitrienko discussed the performance of the Arctic power system in 2008.
Boris Vainzikher, General Director of TGC-1, held a press conference in St. Petersburg on the operational and financial results of TGC-1 in 2008 and plans of development in 2009.
May
TGC-1 completed the heating period in St. Petersburg and the Republic of Karelia.
The Board of Directors of TGC-1 made a number of decisions relating to the Company's investment program.
The General Director was requested by the Board to provide step-by-step funding and implementation of the TGC-1 investment program based on the following priorities:
- replacement of hydro generating units no. 1 and 3 at Svetogorskaya HPP;
- replacement of the hydro generating unit no. 1 at Lesogorskaya HPP;
- commissioning of the CCGT of 180MW at Pervomayskaya CHPP;
- commissioning of the CCGT of 450MW at Yuzhnaya CHPP;
- commissioning of the second CCGT 180MW at Pervomayskaya CHPP;
- commissioning of the CCGT 450MW at Pravoberezhnaya CHPP;
- replacement of hydro generating units nos. 2 and 4 at Svetogorskaya HPP;
- replacement of hydro generating units nos. 2, 3 and 4 at Lesogorskaya HPP;
- and construction of the indoor switchgear and the new main building with two new 50MW-steam turbines
at powerplant-2 of Central CHPP.
At Svetogorskaya HPP of TGC-1, a new 30MW hydro generating unit was put in operation within implementation of the first priority project for replacement of the hydro generating equipment at the HPPs of Vuoksinskie HPPs Cascade. Upon commissioning of the new equipment, total plant capacity was increased to 100MW.
The 50th anniversary of Apatity CHPP of TGC-1 was celebrated.
June
TGC-1 completed the heating period in the Murmansk Region.
The Board of Directors of TGC-1 approved a supplementary agreement to the Agreement on the joint venture between Fortum Power and Heat, Carbon Energy Projects and TGC-1, thus excluding from the list of joint ventures the project “Power savings in heat networks through replacement of old pipelines with pipelines with PU insulation”.
In St. Petersburg, an opening ceremony of the new 123MW turbine unit, was held at Vyborgskaya CHPP of TGC-1. Within the plant refurbishment project, the 100MW turbine unit no. 4, commissioned in 1964, was dismantled and replaced with a new 123MW steam power unit.
Kirill Lykov was appointed Deputy General Director for Economy and Finance of TGC-1. Before joining TGC-1, Kirill Lykov worked as an Executive Director of INTERROS Holding Company.
TGC-1 published its audited consolidated financial statements for 2008 prepared in accordance with International Financial Reporting Standards (IFRS).
Annual General Meeting of Shareholders (AGM) of TGC-1 took place in St. Petersburg on June 17, 2009. The Company's shareholders approved the annual report, the annual financial statements of TGC-1 for 2008, elected new members to the Board of Directors and the Audit Commission, and approved the proposals of the Board of Directors on several other matters. The AGM decided not to pay a dividend for the 2008 fiscal year and to allocate the retained profits from that reporting period to implementation of the investment projects and the reserve fund.
July
The first meeting of the new Board of Directors of TGC-1 was held. Kirill Seleznev, Board member, Head of Gas and Liquid Hydrocarbons Processing and Marketing at Gazprom was elected Chairman of the Board of Directors, while Denis Fedorov, General Director of Gazprom energoholding, and Kari Kautinen, Vice-President of Fortum Oyj, were appointed Deputy Chairmen of the Board of Directors. New members of the Committees of the Board of Directors were selected.
Murmanskaya CHPP held the AGM. The Company shareholders approved the annual report, the annual financial statements of Murmanskaya CHPP, and elected new members of the Board of Directors and the Audit Commission.
TGC-1 placed a five-year bond issue of series 02 for a total of RUR 5 bn on MICEX. In the course of placement through subscription, demand significantly exceeded the offer. The interest rate was set at 16.99% per annum with a put option in 2 years. Gazprombank and Gazenergoprombank were organizers of the placement.
MICEX decided to transfer TGC-1 ordinary shares from the quotation list A2 to the quotation list A1.
Kirill Seleznev, Chairman of the Board of Directors of TGC-1, visited Vuoksinskie HPPs Cascade in the Leningrad Region and the new diesel power plant on Valaam Island.
TGC-1 released its operational and financial results under RAS for the first half of 2009.
Results of an offer to Murmanskaya CHPP shareholders of buy-back of their ordinary and preferred shares were summed up. As the result of securities purchase, TGC-1 increased its ownership of ordinary shares of Murmanskaya CHPP from 90.24% to 95.03%, and the TGC-1’s share in the authorized capital of Murmanskaya CHPP increased from 84.06% to 90.34%.
August
A working meeting of managers and specialists of TGC-1 with representatives of Finland’s and Norway’s power systems was held at the Finnish village of Inari on the 50th anniversary of the signing of the Trilateral Agreement on the use of water resources of Lake Inari.
The 60th anniversary of the Vuoksinskie HPPs Cascade of TGC-1 was celebrated.
General Director of TGC-1, Boris Vainzikher, held a meeting with the head of the Municipal Assembly of Narva, Estonia, Mikhail Stalnuhin. During that meeting, Mr. Vainzikher and Mr. Stalnuhin discussed the current status and future development of energy systems in Russia and Estonia.
The Board of Directors of TGC-1 approved additional financing in 2009 for Company’s ongoing investment projects for a total of RUR 4,129 mn, primarily for the priority investment projects.
September
A new 50MW and 100GCal/h turbine unit at Vasileostrovskaya CHPP was put in operation. Its commissioning improved significantly CHPP efficiency and the overall reliability of power supply to St. Petersburg consumers. Alexey Miller, Chairman of the Board of Gazprom, and the Governor of St. Petersburg, Valentina Matvienko, took part in the opening ceremony.
TGC-1 started the heating period in St. Petersburg, Republic of Karelia and Leningrad and Murmansk regions.
Boris Vainzikher, General Director of TGC-1 held a meeting with the Governor of the Murmansk Region, Dmitry Dmitrienko. Readiness of the Company's power plants in the region for the next heating period was discussed.
Refurbishment of hydro generating unit no. 2 at HPP-16 was completed as part of the project to overhaul Serebrianskie HPPs Cascade of TGC-1.
October
Alexey Miller, Chairman of the Board of Gazprom, and the Governor of the Murmansk Region, Dmitry Dmitrienko, entered in a Cooperation Agreement for 2010-2015 for development of bilateral relations within the framework of strategically important Gazprom projects in the Murmansk Region: namely integrated development of Shtokman gas condensate facility, construction of a sub-sea gas pipeline and gas processing facilities, including a LNG plant, and construction of Murmansk-Volkhov gas pipeline. TGC-1 HPPs located in the north of the Murmansk Region are likely to become a major source of electricity at the initial stage of development of the Shtokman field. That agreement also provides for implementation of the project for centralization of the heat supply systems of the cities of Kirovsk and Apatity in the Murmansk Region on the basis of Apatity CHPP of TGC-1.
For the first time TGC-1 published its interim non-audited consolidated financial statements for the 1st half of 2009 under International Financial Reporting Standards (IFRS).
Boris Vainzikher, General Director of TGC-1, was announced the winner of an independent non-commercial competition “Chief of the Year” in the category “Charismatic leader”. “Chief of the Year” is a competition for businessmen, organized by “The Chief” magazine with the support of St. Petersburg Chamber of Commerce and Industry, Retailer Professionals Association, HeadHunter agency and WorkLine Group.
November
TGC-1 received a certificate of readiness for the autumn and winter season upon completion of the audit of preparations of the region’s power plants for the autumn and winter load peaks from the special commission, including representatives of the Ministry of Energy of Russia, Rostechnadzor in the North-West Federal District, System Operator of UES of Russia, and Gazprom energoholding.
The Board of Directors of TGC-1 approved of the integration of Svirskie HPPs Cascade and Volkhovskaya HPP in the a single structural entity – Ladozhskie HPPs Cascade and approved the Company's new organizational structure starting from January 1, 2010.
The 85th anniversary of the commissioning of the first heat pipeline in Russia from the Leningrad State power plant no. 3 (currently PS-3 of Central CHPP of TGC-1) and the building at 96 Fontanka Embankment was celebrated.
December
Educational project of TGC-1 “Safe and cost-efficient power supply” was declared a winner in the contest “The best PR project in power efficiency and power saving” in the PROBA-IPRA GWA field, and received a certificate of honour from the national Ministry of Energy in the competition “The best specialized project of TEC press services”.
The Board of Directors of TGC-1 resolved to establish a subsidiary – JSC St. Petersburg Heating Grid. Creation of St. Petersburg Heating Grid was a result of a trilateral agreement between the Administration of St. Petersburg, TGC-1 and GUP TEC SPb to unify the heating grids within the territory of CHPPs of TGC-1. It was decided to appoint Eugeny Khachaturov General Director of the St. Petersburg Heating Grid.
The final testing of the new hydro generating unit at Lesogorskaya HPP of Vuoksinskie HPPs Cascade of TGC-1 (Leningrad Region) was completed.
TGC-1 submitted bids for competitive capacity auction organized by UES System Operator. On the basis of the results of the competitive capacity auction, all the equipment was selected and tariffs for the capacities to be commissioned were set by the Market Council.
In advance of the Power Engineering Day, the Ministry of Energy of the Russian Federation and the local authorities of the Russian regions in which TGC-1 operates recommended TGC-1 personnel for government and industry awards.
