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. Last Updated: 07/27/2016

IES Opens 'One-of-a-Kind' Boiler

Courtesy Of Ies-holdingBelykh and Shishkin, center, at the opening ceremony of the new boiler.
KIROV -- Integrated Energy Systems, or IES, opened a boiler on Thursday at its Kirov power station that will operate on four different kinds of fuel, a move toward efficiency that the generator hopes will help it brave a period of low consumption and tight credit.

"No one else in the world makes this kind of unit," Vitaly Skuditsky, chief executive of NTV-Energo, the boiler's designer and builder, said at the plant's opening ceremony on Thursday.

The construction of the boiler, which can run on fuel oil, coal, peat and gas, cost IES 232 million rubles ($6.95 million). The company said it hoped to reduce its dependency on Gazprom and cut the power production costs with the new boiler.

The new boiler, which Skuditsky described as "100 percent Russian" and "world class," was built on the base of an old one, which was constructed in 1965 and was still working until its overhaul.

The redesign, involving a change in all components and mechanisms in the shaft, will reduce the amount of pollution produced by 65 percent.

IES is counting on the boiler's increased efficiency to help boost profits as consumption falls and credit is hard to come by.

Electricity consumption throughout the country fell 11 percent in the first quarter, compared with 6 percent in Kirov.

The firm, however, expects the new boiled to drive down production costs significantly at its Kirov power station and hopes to become more independent from Gazprom.

"We have complicated contracts with Gazprom, and that means we pay a lot of fines," IES vice president Alexander Shishkin said at the ceremony, which was also attended by Kirov Region Governor Nikita Belykh. "IES Trading tracks the fuel price daily and can switch the new boiler from one fuel to another in 20 minutes."

The Kirov station pays about 1,500 rubles per ton for coal and gas, while peat ran at about 2,000 rubles per ton as of April 16, according to IES data.

"But now with the new boiler, we can use the fuel more efficiently and rely more on peat, which we are making a priority in our strategy," Shishkin said.

IES gets the fuel from Vyatka-Torf, a resources firm that extracts about 40 percent of all the peat in Russia.

IES has pledged to invest 3 billion rubles to increase peat extraction from the current level of 500,000 tons per year to 3 million tons over the next five years. The Kirov administration will also invest 1.3 billion rubles in the project.

"Fuel prices are unpredictable, so the peat industry has a strategic importance," Belykh said. "The launch of the new unit is a breakthrough as any investment today is considered a kind of a feat," he added.

IES, majority-owned by Viktor Vekselberg, was among three private companies that Energy Minister Sergei Shmatko reprimanded on Wednesday for not investing enough in electricity assets. He said IES had shown poor progress on its investment plans.