The company will invest $3 billion in the Russian fuel and energy sector The Italian energy company Enel is ready to invest another $3 billion in the Russian power industry, said the company's leader Fulvio Conti in Sochi on Friday. The company noted that the money to be spent on raising its share in Wholesale Generation Company No. 5 (WGC-5) is not included in this amount. Enel has already spent $6 billion in Russia and is getting ready to become an investment leader: RAO UES of Russia Management Board Chairman Anatoly Chubais believes that Enel will soon outperform Germany's E.ON in this area. Mr Conti announced the company's intention to invest another $3 billion in the Russian power industry at a meeting of Russian President Vladimir Putin with businesspeople. This capital investment is performed as part of market liberalisation, according to Mr Conti. The funds will be spent to rebuild and upgrade gas-fired power units and double their efficiency. Enel has already invested $6 billion in Russia. Mr Conti said not so long ago that his company will finish its acquisitions in Russia with purchasing WGC-5. Enel owns 29.99% of the company's shares and has already obtained approval from the Federal Antimonopoly service for consolidating a 100% holding. However, experts do not rule out that the Italians could fight for territorial generation company No. 2 (TGC-2) or TGC-4 which have not been occupied by strategic investors as yet. Finam Investment Company analyst Semion Birg estimates that control over WGC-5 at current prices would cost the Italian company $1.2 billion, provided that they already have 30% of shares, and it would have to spend $300 million and $700 million, respectively, on the additional share issues of TGC-2 and TGC-4. "This is not an appropriate amount to venture an attack," disagrees Vassily Konuzin of Alemar Financial and Investment Company, noting the need to develop purchased assets. He reminds that most generating companies obtain funds for their investment programmes from selling their additional share issues. "Meanwhile, WGC-5 has had no additional share issue actually, therefore there is a need for other funding sources," says he. The three billion dollars will be spent to reconstruct and upgrade gas-fired units, Enel told RBC Daily. The company explained that the $6 billion already invested includes the purchase of the interest in WGC-5 and its increase, Yukos's gas assets, and a share in Rusenergosbyt. The company found it difficult to say what projects Mr Conti implied. According to the RAO UES investment programme approved in January this year (when WGC-5 was still part of the holding company), the total amount of investment in WGC-5 between 2006 and 2010 will be 57.2 billion roubles, including 18.37 billion roubles of investment without commissioning new capacity. Mr Konuzin believes that to double efficiency the company will most likely build expensive greenfield power plants, which will cost it $1,000 per 1 MW of capacity, whereas the standard investment programme of a generation company provides for $800 per 1 MW. The expert says that the announced $3 billion will enable the company to commission 3 GW of new efficient capacity. No decision on amending the RAO UES-proposed investment programme has been passed as yet. The WGC-5 Board of Directors which already includes Enel representatives will today consider amending the investment programme and elect its Chairman, Deputy Chairman, and Committee Chairmen. It should be noted that Enel's grandiose plans may make it the leading foreign investor in the Russian power industry. After his meeting with Fulvio Conti, RAO UES Management Board Chairman Anatoly Chubais said that Mr Conti gave him assurances that Enel will soon seize the leadership. He noted that last week Germany's E.ON outran Enel by paying $4 billion for the government-owned interest in WGC-4. |
