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Unified Energy System

February 11, 2003

Russian Government approves RAO UES investment program for 2003

Moscow, 11 February. The 2003 investment program of RAO "UES of Russia" has been confirmed by the Russian Government and approved by the Resolution of the FEC of Russia dated 24 December 2002. Total investments for the year will make RUB 23,551 million (RUB 28.49 billion taking into account depreciation and other sources of finance). The investment program has been worked out in accordance with the principles of electricity industry restructuring and includes the following:

  • electric power generating facilities (hydroelectric and thermal power plants);
  • power grid (transmission of capacity from the existing and new power plants);
  • measures to prepare the market infrastructure.

The investments in the construction of generating facilities and technical upgrade will make to RUB 13.22 billion. These investments will be primarily in the thermal and hydroelectric power plants to be constructed in accordance with the resolutions of the Russian Government and orders of Russia's President, and the projects to be put into operation that have a large capacity reserve and can ensure the current reliability of power supply.

Allocations for power grid construction projects make RUB 7,492 million. These are HV lines that ensure transmission of electricity from power plants, and interconnected power lines and substations.

For the purposes of market infrastructure development, RUB 524 million in funds have been committed for the upgrade of hardware and software of "UES System Operator-Central Dispatch Administration" (UES SO-CDA) and the Integrated Dispatch Administrations (IDAs), and for the creation of an electricity automated commercial metering system.

RUB 2,315 million in funds will be used for the reconstruction of energy facilities in the Republic of Chechnya, design and development work, and infrastructure projects.

Total investments throughout the Holding Company will increase to RUB 88.9 billion from RUB 60.45 billion in 2002; in RAO "UES of Russia" the investments will grow to RUB 28.49 billion from RUB 19.72 billion (taking into account depreciation and other sources).

The increase in the investment program of RAO "UES of Russia" is due, among other things, to the increase in depreciation of the industry's fixed assets (depreciation currently exceeds 50%). In particular,

the share of electric devices that have reached the end of their useful life makes 30% (power transformers) to 70% (electric motors);
out of 249 power generating units of 150-1200 MW, 80% have been used for more than half of their useful life;
depreciation of the power grid assets currently makes 63.4%.

Many power plants have long been past the end of their useful life. For instance, Noglikskaya HPP in Sakhalinskaya Region has been used twice its useful life.

In 2003, about 2,432.7 MW of turbine capacity is planned to be put into service throughout the Holding Company, compared to 640 MW in 2002, with 428.2 MW to be funded by RAO "UES of Russia" (compared 146.7 MW in 2002), and the rest of the turbine capacity to be financed with the regional energos' own funds.

The most important of the capacities to be commissioned next year are two 185 MW hydroelectric generating units at Bureyskaya HPP (Amurskaya Region). This power plant is the top priority construction project of RAO "UES of Russia". In 2003, RUB 7 billion in funds will be allocated for this construction project, with funds to be provided exclusively by RAO "UES of Russia". Commissioning of this power plant will help eliminate the electricity shortage in the Far East of Russia, mainly in Primorsky Kray, increase the power supply reliability, and reduce the volume of coal that has to be brought to the area annually by several million tons. In 2003, two hydroelectric units will be put into operation, with the total capacity of 370 MW. The HPP construction is to be completed in 2008. The plant's installed capacity will amount to 2,000 MW, with the average annual output of 7,100 million kWh.

In Order of the Russian Government No. 1186-? dated 27 August 2002, the construction of Kaliningradskaya CHPP-2 was identified as a priority project to ensure the energy security of Kaliningrad Region. In 2003, RAO "UES of Russia" will allocate RUB 2.3 billion in funds for the construction of Kaliningradskaya CHPP-2. The power plant will have two combined-cycle gas turbines of 450 MW each. The first unit is expected to be put into operation in 2005.

The construction of Sochinskaya CHPP will ensure stable and uninterrupted power supply to consumers in the Sochi area, including the Krasnaya Polyana recreation area, in accordance with the approved government program. The RUB 1 billion have been allocated for the project for 2003. 76 MW of capacity will be commissioned as early as 2004.

The amount of RUB 1.1 billion allocated for Irganayskaya HPP in Dagestan will be used to raise the dam and increase the plant's capacity to the design value, from 214 MW to 400 MW, which will help meet the peak loads in the North Caucasus energy system.

The investment program of OAO "UES FGC" for 2003 makes RUB 10.9 billion (including depreciation and other sources), up 45% from last year. The 2003 investment program envisages the commissioning of 242 km of power transmission lines, 667 MVA of transformer capacity, and 400 MVAr of reactive power compensation units.

The top priority projects include construction of HV lines to transmit electricity from new generation units being constructed at power plants.

The following HV lines are being built to transport electricity from Bureyskaya HPP: 500-kV line "Primorskaya CPP Khabarovskaya", 398-km long, including the unique 7.8-km crossing of the Amur River; 128-km interconnections with Bureyskaya HPP of the 500-kV line "Amurskaya Khabarovskaya"; and the second 500-kV line "Bureyskaya HPP Khabarovskaya". RUB 2.3 billion in investments have been committed for the construction of these lines alone.

The 272-km transmission line "Kalininskaya NPP Cherepovets" of 750 kV is being constructed to ensure transmission of electricity from the third generating unit of 1 million kW at Kalininskaya NPP scheduled to be commissioned in 2003.

The 330 kV line from Kolskaya NPP to Karelia (354 km long) and two 220 kV lines in Rostov Region are being constructed to enhance the reliability of power transmission from the operating generators at Kolskaya NPP and Volgodonskaya NPP in 2003.

The funds allocated to address the problem of transmission of electricity from nuclear power plants total RUB 1.5 billion.

The Company's top priorities for 2003 include the development of a system of measures to increase the reliability of power supply in Sochi energy system. The program envisages the upgrade of the existing HV lines of different voltages and the continued construction of 500-kV line "Tsentralnaya Psou" (2nd phase of the project) and "Adler" 500-kV substation. RUB 0.88 billion have been allocated for these projects.

Among the interconnected power transmission projects under construction, especially noteworthy are the 500 kV lines, "Zarya Barabinsk" and "Barabinsk Tavricheskaya", with the total length of 732 km, and "Barabinskaya" and "Voskhod" substations. This transit line from Novosibirsk to Omsk will help eliminate the capacity shortage in the Omsk energy system by routing electricity from Central Siberia. Being part of the Siberia Urals transit system, these HV lines will allow, in the long term, IES of Siberia to operate in parallel with UES of Russia at 500 kV. The investment program allocates RUB 0.84 billion for this purpose.

In 2003, like in the previous years, much attention will be given to re-equipment and upgrade of the existing power networks owned by OAO "UES FGC". The Company's primary task is to stop the growth in the amount of equipment that has reached the end of its useful life. If this is not done, there will be a threat of both local and system-wide accidents and a failure of the Unified Energy System. Total allocations for the power grid upgrade in 2003 make RUB 2.9 billion, an increase of 35% from last year.

Besides, under the program, RUB 530 million have been allocated to restore the 330-kV line "Vladikavkaz Grozny Chir-Yurt". This power transmission line is being restored within the framework of the comprehensive program to increase the reliability of the 330 kV transit line "UES of Russia Dagestan Azerbaijan". The operation of the HV line will start, on a temporary basis, in February 2003, with the restoration to be completed in August this year.

Besides, RUB 430 million will be allocated for the creation of a corporate telecommunications system, and RUB 250 million will be used develop and implement the Electricity Automated Commercial Metering System (EACMS). These systems are key to establishing the infrastructure needed for a competitive electricity market.

* The Holding Company of RAO "UES of Russia" includes, besides RAO "UES of Russia" (Parent Company), OAO "Federal Grid Company", OAO "UES System Operator-CDA", the regional energos, and the AO-power plants.

Power generation capacities to be commissioned in 2003, with financing provided by regional energos and AO-power plants:

  • Commissioning of 2ndgenerating unit (800 MW) at Nizhnevartovskaya CPP;
  • Reconstruction of 1stgenerating unit (190 MW) at Tyumenskaya CHPP-1;
  • Commissioning of 1stgenerating unit (180 MW) at CPP-5 owned by AO "Lenenergo";
  • Reconstruction of 5thgenerating unit (115 MW) at Yuzhno-Kuzbasskaya CPP;
  • Reconstruction of 8thgenerating unit (110 MW) at CHP-22 owned by AO "Mosenergo";
  • Reconstruction of 3rdgenerating unit (105 MW) at CPP-3 owned by AO "Mosenergo";
  • Reconstruction of 6thgenerating unit (115 MW) at Artemovskaya CHPP;
  • Reconstruction of 10thgenerating unit (85 MW) at Krasnoyarskaya CHPP-1;
  • Reconstruction of 3rdgenerating unit (45 MW) at Yakutskaya CPP;
  • Reconstruction of 3rdgenerating unit (30 MW) at Barabinskaya CHPP;
  • Reconstruction of 4thgenerating unit (30 MW) at Penzenskaya CHPP-1;
  • Reconstruction of 4thgenerating unit (12 MW) at Berezovskaya CHPP-2;
  • Reconstruction of 29thgenerating unit (12 MW) at HPP-1 owned by AO "Mosenergo";
  • Commissioning of two generators of 10 MW capacity (DGA-5000) at Ryazanskaya CPP;
  • Commissioning of 1stgas turbine generating unit (8 Moscow) at Shakshinskaya CHPP;
  • Reconstruction of 8thgenerating unit (115 MW) at Volzhskaya HPP in Zhigulevsk;
  • Reconstruction of 3rdgenerating unit (27.5 MW) at Nizhne-Svirskaya HPP;

         Commissioning of three generators with total capacity of 15 MW at Gubinskaya HPP.

Power grid facilities to be commissioned in 2003, with financing provided by regional energos and AO-power plants:

  • 220 kV line "GPP-2", for own needs of Rostovakaya NPP
  • 21.5 km to be commissioned in December this year
  • 500-kV line "Tsentralnaya-Psou"
  • 54.4 km to be commissioned in November this year;
  • 500-kV line "Primorskaya CPP Khabarovskaya" with the "Khekhtsir" 500-kV Substation for voltage of 220 kV (1ststartup complex)
  • 127.7 km to be commissioned in September this year.

Upgrade of power grid facilities in 2003, financed with funds of RAO "UES of Russia":

  • 500-kV transmission line "Bologoe Novaya Kalininskaya Konakovskaya CPP", with substation upgrade - 125 MVA of capacity to be put into operation;
  • "Veshkaima" 500-kV substation - 180 MVAr of capacity to be put into operation;
  • "Klyuchiki" 500-kV substation - - 125 MVA of capacity to be put into operation;
  • "Penza-2" 500-kV substation - 100 MVAr of capacity to be put into operation;
  • "Novo-Anzherskaya" 500-kV substation - 100 MVAr of capacity to be put into operation.



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