OGK-1 Looks for Government Buy-In

BloombergOGK-1, owner of the Nizhnevartovskaya power plant, pictured, hopes to get 23 billion rubles in a sale of shares.
Power producer OGK-1 is counting on the government to buy its secondary offering of shares worth 23 billion rubles ($867 million), general director Vladimir Khlebnikov said Friday.

"We are talking about a share offering to the government or one of its structures to finance our [power plant] project in Urengoi," Khlebnikov said during a conference call. "We are asking the state for 23 billion [rubles]."

The government controls OGK-1 through its majority stakes in hydroelectric giant RusHydro and the Federal Grid Company, which jointly hold most of OGK-1's shares.

Khlebnikov also said the company had secured a loan from Sberbank to help finance the Urengoi project and its everyday operations.

An industry source close to the company said the loan was worth up to 500 million rubles ($18.84 million).

The project to build new power turbines in Urengoi will face a financing shortage of 8 billion rubles over the next five months unless cash is raised soon, Khlebnikov said.

The entire project is valued at 25.6 billion rubles.

Sources close to the company said last month that a state bank might buy a stake in OGK-1, as it is in urgent need of at least $1 billion to carry on with investment.

The generator was the only one of the country's 20 major electricity producers not to find a strategic investor during the reform of the sector. A preliminary deal to have Dubai's sovereign wealth fund invest up to $5 billion in OGK-1 fell apart last month.

"That was the fifth investor we had talked to," Khlebnikov said. "We told the Energy Ministry that the company will not buy us, that deals of this kind are not done by white knights. … From the very beginning it looked like a show," he said.