Moscow, 20 February 2008. Territorial Generation Company #1 (TGC-1) and Fortum have signed an agreement for the sale of the greenhouse gas emission reduction units (ERUs) generated as a result of the joint implementation (JI) projects carried out by TGC-1.
Under the Agreement, Fortum will purchase from TGC-1 about 5 million metric tons of ERUs. Based on the current market prices for certified emission reduction units (CERs) in the developed countries, the transaction amount is estimated at about ?70 million.
TGC-1's JI projects include modernization of the hydropower plants in the Leningrad Region, expansion and modernization of several CHPPs in Saint Petersburg, and projects to improve energy conservation in the heating networks.
The ERU purchase agreement is based on the MoU on implementing the Kyoto mechanisms in Russia signed by Fortum and RAO "UES of Russia" in 2006. It is the largest transaction of the kind made in Russia.
The ERUs purchased by Fortum will cover almost half of its annual emissions of CO2. TGC-1 will use the proceeds from the deal to finance its investment programme.