11. Key Development Areas in 2012

Key Development Areas in 2012

The following are the key areas of the Company’s development within a framework of the investment activity:

In Saint Petersburg TGC-1 is building highly-efficient up-to-date CCGT-units with total capacity of 1,260 MW. In 2012, it is planned to put into operation the 450 MW CCGT-units at the Pravoberezhnaya CHPP. Besides, TGC-1 is working on renovation and retrofit of the main equipment at HPPs of the Republic of Karelia, Leningrad Oblast and Murmansk Oblast, commissioning of up-to-date process control systems, telemechanics and communication systems. By 2016, the Company plans to commission over 1,600 MW of new electric capacities. Besides commissioning new capacity, TGC-1 has already started taking out of operation not only independent outdated units, but even the whole plants.

Grid Business Modernization

TGC-1’s heating capacities urgently need renovation. Despite connection of new consumers to TGC-1’s power sources, the heat consumption is not likely to change due to development of municipal programmes for heat efficiency and optimization. In order to ensure reliable and high quality heat supply to consumers of Saint Petersburg and Leningrad Oblast and with consideration of future heat loads, the Company is going to optimize expenditures, attract external investors and improve the heating grids efficiency.

Restructuring the heating business in Saint Petersburg shall become an example for other heating facilities in other regions where the Company is present. In 2011, formation of the authorized capital structure of Saint Petersburg Heating Grid was completed, and besides TGC-1 the structure comprises GUP TEC SPb. The main activity of Saint Petersburg Heating Grid is to improve reliability of the heat supply system and to expand the TGC-1’s heat supply area through construction of new heat pipelines in order to connect the buildings of new residential quarters and transfer to the centralized heat supply from TGC-1’s power sources of the consumers who are currently using other heat sources with expired life cycle. In 2011, construction of the heating mains from the Apatitskaya CHPP to the Central Transformer station in the city of Kirovsk in Murmansk Oblast was initiated. At the same time renovation of the Apatitskaya CHPP of the Kolsky Branch got underway and the works will be completed in 2012. The heating mains will be commissioned in 2013.