Stanislav Neveynitsyn, OGK-2
Release Date: 2009-05-13
December 2008As recently appointed General Director of OGK-2, which is one of the most promising power generation companies in Russia, what are the objectives you have set for the company?
The main strategic task that OGK-2 is facing is stable, positive development of the company in the mid-term and short-term. One of the top priority tasks is preparation for the autumn/winter season. The key long-term objective is successful implementation of massive investment construction of new power facilities at the sites of Stavropol, Serov and Troitsk GRES (state district power plants). Were constructing 2 gas-powered 440 MW power units at Stavropol GRES, 2 coal-powered 660 MW power units at Troitsk GRES and 2 coal-powered 330 MW power units at the Serov power plant. The implementation of our investment projects will allow a 33% increase of the installed capacity of our power plants. Besides, the priority tasks for OGK-2 and for me personally are the increase of company’s capitalization, efficient interaction with shareholders, investors and consumers of electricity; improvement of the work on power market and start of work on capacity market and forming a strong and high-class team.
You mentioned power production, capitalization and human resources as key factors for sustainable development. As Russia privatizes power generation, how will OGK-2 ensure a smooth transition and guarantee the value for shareholders, especially for portfolio investors in Russia and at the London Stock Exchange (LSE)?
Yes, of course certain changes are expected. First, OGL-2 will have to adapt to corporate standards of the new owner, Gazprom; these standards partially fit the RAO UES of Russia corporate standards. An important factor that influences our activity is the fact that OGK-2 is the only heat generation company that is quoted on the LSE. That is the reason why we’ll do everything possible to keep our ground at the largest world stock exchanges with positive trends in the dynamics of our stocks.
Our partner is Deutsche Bank that gives us considerable support in maintaining the liquidity of out stocks. Our policy is transparency and openness as regards the investment community; the top figures of OGK-2 hold systematic meetings with investors both in Russia, London and New York. I’d like to note that many analysts and investors assess OGK-2 as the most underestimated аnd prospective among the Russian heat generation companies.
Although the dialogue with investment institutions that you mentioned seems to be very positive for the general public, there are many OGKs is Russia, and all carry almost the same name. So, how does OGK-2 distinguish itself from the rest?
Firstly, OGK-2 has the youngest equipment among the heat generation companies, apart from OGK-4. Secondly, OGK-2 ranks third among heat generation companies in terms of installed capacity. Thirdly, OGK-2 is the third in terms of electricity and heats production.
Besides, all the regions of our presence are prospective from the strategic point of view. Take Surgut – an oil and gas region; Chelyabinsk – actively developing region bordering with Kazakhstan. Stavropol – a booming southern region with export opportunities beyond the Caucasus Mountain Range. Pskov is a North-West region, a prospective direction for Europe. Serov, Sverdlovsk region, is booming industry and a strong lack of power. So, the demand in all these regions witnesses a serious thirst for power.
You mentioned market capitalization of the company and the strong increase of capacity in the areas of development. How are you planning to increase market capitalization?
I can voice some common but efficient ways of increasing our capitalization – more efficient current activity, better KPIs, lower emergency rate, forming a strong team, interaction with investors, openness of the management and transparency of information.
Would new issues of shares be considered?
Why not? We need financing to construct new power units. Besides, what was the power reform about? For the power sector to become open, modern and competitive.
Following the objective of increasing capacity, OGK-2 has signed an agreement with the Chinese company Harbin Turbines Co. How did this deal take place and why is a Chinese company well positioned to contribute to the development of companies like OGK-2 in their objective of increasing capacity? Have you been to China?
Yes, I’ve been to China in March, there I became familiar with the operation of the company and made a visit to a coal plant. The visit impressed me greatly, mainly as a graphic example of implementing large operating power projects in China. I’m convinced that cooperation with Chinese manufacturers is very prospective for us because Russia does not have enough power capacity for development; besides, Russian and European equipment manufacturers cannot cope with the boom of construction in power engineering, whereas the Chinese can quickly and efficiently manufacture equipment, what I’ve made sure of during my visit.
Such an agreement could pave the way for further deals between Russian power generation companies; however, there are many detractors in the sector who believe that if this trend continues, it could harm the Russian producers of power equipment. As an expert in this field, what is your point of view?
We have an investment program that has to be implemented and we’re responsible for executing the contracts for power sales that we’ve signed. We should first perform our duties that we owe to the consumers and satisfy the growing demand for power in industry. In this respect the issue of who will be the equipment manufacturer becomes secondary. I don’t think that Chinese manufacturers hinder the Russian ones. Our people should apply all efforts to increase their competitiveness. If we say we live in market economy, we should work in conditions of market economy.
We understand that the agreement with Harbin Company means there will also be sharing of human resources and training. You’ve mentioned Human Resources as one of the key components of success for OGK-2. How do you think your management will cope with a multicultural team like this?
It should be noted that a contract for equipment supply has been made by our general contractor, Kvarz-Tyumen, who is our intermediary in working with the Chinese side. We estimate the prospect of cooperation as a good one and do not see any obstacles for it so far.
Are there two different cultures?
Of course, difference of cultures and mentalities, due to some peculiarities of the Eastern mentality, pose some difficulties, but still I can’t see any global problems.
Russian companies have tried and are still trying to get involved in the export of electricity to China and other forms of joint cooperation. As the General Director of OGK2, how do you think cooperation will evolve?
There is no doubt that the prospects exist, Chinese industry develops with a quick pace. For this reason the future of Chinese and Russian power sectors is closely intertwined. Whether it will take the form of exporting electricity to China or from China is yet to be seen but the cooperation will be there.
Our economies are closely connected, we’re good neighbors and cooperation is just inevitable.
Each country has its own ideas and laws but as far as power generation and business go, we have a good future.
Besides the agreement with Harbin Company, are there any other agreements with Chinese companies in sight for OGK-2? Is this just the beginning?
No agreements are planned yet in the framework of OGK-2. The talk about other power generation companies will be possible after we start to implement the project. If it goes smoothly, timely in terms of work schedule and good quality is maintained, other companies will regard our “pioneering” and will follow our example.
I believe that the cooperation of Chinese and Russian power engineers has long-term prospects. OGK-2 will apply all efforts to make the pilot project of Chinese power equipment engineers in the RF successful.
| Company: | OGK-2 |
| Position: | General Director |
| Country: | Russian Federation |