Valentin Mezhevich, First Vice Chairman of Committee on Natural Monopolies of Federation Council

– This deal will give Rosatom additional capacities for not only building NPPs in Russia but also supplying equipment for NPPs abroad

Atomenergomash OJSC (part of Atomenergoprom OJSC) and the majority shareholders of Energomash (UK) Limited (Alexander Stepanov and Aleksey Plescheev) have signed a memorandum of mutual understanding giving 50% + 2 shares of Energomash (UK) Limited to Atomenergomash. The parties have agreed to finalize the price of the shares and to sign the buying-selling contracts in a month. By that time Atomenergomash will complete Due Diligence of Energomash Group. The money earned from the deal will be spent on the repayment of the Group’s debts to commercial banks. The remaining debt will be rescheduled through an agreement with the creditor-banks. The acquisition of a controlling stage in Energomash is part of Atomenergoprom’s policy to foster competition among suppliers of NPP equipment of long manufacturing cycle. Particularly, Atommash plant is supposed to become a new supplier of reactor equipment.

Today, Prime Minister of Russia Vladimir Putin is visiting Kalinin Nuclear Power Plant and will hold a conference on the prospects of nuclear energy development. Particularly, Putin will consider the implementation of the federal target program “Development of the Nuclear Industry of Russia in 2007–2010 and -2015” adopted in 2006. As you may know, the share of nuclear energy in the total power production in Russia is supposed to be increased from 16% to 25% by 2030. Even if this program is revised and the deadlines are put off, we will still need to build nuclear power plants so as to be able to meet the energy demand of the growing industry after the crisis.

Today, much is being said about the need to optimize expenses and to search for more profitable offers. I must say that in the nuclear industry this is not always possible: in some fields there is simply no competition. That’s why Rosatom is seeking to create competitive environment on the market of NPP equipment production. Monopoly is not good for the corporation as it will have to buy equipment at high prices and will, consequently, be forced to raise the price of its own product – NPP. The decision to acquire half of the shares of Energomash (UK) Limited is exactly a step towards alternative suppliers.  

It should be noted that the deal will give Rosatom additional capacities for not only building NPPs in Russia but also supplying equipment for NPPs abroad.

Rosatom is acquiring a valuable asset as Energomash’s plants are monopolist producers of a wide variety of specific equipment.

Note

Energomash (UK) Limited is a company of Energomash Group. It comprises Atommash (Volgodonsk), Belenergomash (Belgorod), Chekhovenergomash (Chekhov, Moscow region), Barnaul Kotelny Zavod and Uralelectotyazhmash-Uralgidromash (Yekaterinburg) as well as a number of engineering centers and construction and installation organizations. Energomash (UK) Limited also holds a 58% stake in Energo TPP, a company building gas-turbine low-power TPPs. Energomash Group is one of the leaders of Russia’s power machine building and manufactures equipment for different types of power plants. The target markets of the company are equipment for nuclear, thermal and water power plants, oil-gas and mining industries, metallurgy, railways, construction and other sectors. Energomash exports almost 20% of its products to the CIS, Asia and Europe.

The manufacturing enterprises and engineering centers of Energomash Group are situated in eight regions of Russia and employ a total of 12,400 people. The incorporation of the Group into Rosatom State Nuclear Energy Corporation will help it to fully use its industrial capacities and to avoid personnel reduction.