Today, April 27, 2010, the 2nd meeting of the Coordination Council of the Presidium of the General Council of the UNITED RUSSIA All-Russian Political Party dedicated to energy conservation and enhancement of energy efficiency was held at the State Duma of the Russian Federation. The meeting headed by Yury Lipatov, Chairman of the State Duma Committee for Energy and member of the UNITED RUSSIA faction, was attended by IDGC Holding Director General Nikolay Shvets.

In the discussion participants included senior executives and experts from the Russian Ministry of Energy, Russian Ministry of Regional Development, Federation Council, and representatives of the business community and the administrations of the constituent entities of the Russian Federation.

Specifically, the meeting addressed the main provisions of draft Government Program for Energy Conservation and Energy Efficiency developed in accordance with the requirements of Federal Law No. 261-FZ, projects for economic modernization, and incentives for profit-making entities to promote energy conservation measures.

Nikolay Shvets gave a detailed account of a high level of depreciation of the fixed assets of the Russian electric distribution grid sector. According to Mr. Shvets, a draft Program for Renovation of Electric Distribution Grid Facilities was developed to reduce the current depreciation level averaging 69% and electricity losses (accounting for 8.7% as of the end of 2009). The Program period is 10 years and its implementation cost is estimated at 2.85 trillion rubles. The Program implementation is expected to help reduce equipment depreciation to 50% and losses to 6% by 2020. According to Nikolay Shvets, the Program is under consideration by the Russian Ministry of Energy, Ministry of Finance, Ministry of Regional Development, and the Ministry of Industry and Trade of the Russian Federation to be submitted for approval to the Government of the Russian Federation in May 2010.

“The Program for Renovation is expected to be financed from the federal budget (38%) and from the funds raised through the transition of the regions of the Russian Federation to the electricity transmission tariff regulation system based on the return on investment method (11%),” said Nikolay Shvets. He also noted that “from 2012 the economic effect resulting from the implementation of the Program for Renovation is estimated to reach about 577 billion rubles, making it possible to finance 20% of the total Program cost. It is planned to borrow an additional amount of about 882 billion rubles.”

To launch the Program for Renovation, an application listing IDGC Holding’s high-priority investment programs was submitted to the State Duma Committee for Energy. These programs include ones related to construction of facilities for network connection and renovation of cable power lines in Saint Petersburg, a program for electricity loss reduction in North Caucasus, and a program for rehabilitation of electric facilities in the Chechen Republic.

“All the programs developed by IDGC Holding provide for attraction of financial resources from the federal budget through the participation of the Government in additional issues of shares in the Company,” said Nikolay Shvets. “It is important that these funds will be channeled into Russian entities—electrical grid equipment manufacturers who at present can meet 95% of the demand of the IDGC Holding distribution grid companies.”

Yury Lipatov voiced support for IDGC Holding’s projects for energy conservation and enhancement of energy efficiency.