Russia’s SGC snaps up stake in rival power group SIBECO

15 February 2018, Week 06, Issue 897

Siberian Generating Co. (SGC), one of Russia’s largest power companies, has closed a deal to buy a controlling stake in its smaller peer, Novosibirsk-based Sibirskaya Energeticheskaya Kompaniya (SIBECO).

In a statement on February 9, the group reported it had completed the purchase of 78% of SIBECO’s shares, in a move aimed at consolidating its position in the Siberian power and heating markets. The takeover, which will be made through SGC’s subsidiary, Kuzbassenergo, was approved by Russia’s Federal Antimonopoly Service (FAS) in January. All of SIBECO’s contracts with partners and customers will remain intact following the change in ownership.

SGC, which produces thermal and electrical power in Siberia’s Altai, Krasnoyarsk, Kemerovo, Khakassia and Tuva regions, does not publish consolidated financial statements. It is controlled by businessman Andrey Melnichenko, who also owns SUEK, Russia’s biggest coal miner, and Swiss-based fertiliser producer EuroChem. Many of SGC’s power plants run on coal extracted at SUEK’s nearby mines.

SIBECO also generates electricity and thermal energy, in the Altai and Novosibirsk regions of southern Siberia. It posted a net profit of 1 billion rubles (US$17 million) in 2016 on the back of 28.2 billion rubles (US$482 million) in revenues. The company’s owners have not been disclosed, although seven of the nine members of its board are also top managers at RU-COM, an industrial holding involved in sectors ranging from power generation and coal mining to agriculture and road construction.

SIBECO has been seeking a buyer for several years and previously held talks with Russian coal producers Russky Ugol and Kuzbassrazrezugol as well as locomotive manufacturer Transmashholding.

SGC has said its takeover of SIBECO will raise operational efficiency, slash management costs and create synergies in procurement. The company’s installed electrical capacity is projected to rise by 38% to 10,900 MW as a result of the deal, while its thermal power capacity will expand by 53% to 23,900 Gcal per hour. Its overall share of the Siberian energy market will reach 33%, up from 15% at present, making it the second biggest operator after Eurosibenergo, which has a 36% share. In Altai, SGC’s market share will reach almost 100%. Analysts have valued SGC’s investment in SIBECO at between 18 and 24 billion rubles (US$307-410 million).

Joseph Murphy

Edited by

Joseph Murphy


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