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Germany's E.ON, Russia's STS set up power JV in West Siberia

Germany's E.ON, the largest power company in Europe, and Russian energy corporation STS announced Thursday the establishment of a joint venture on a parity basis for electricity generation in Western Siberia.

The new venture, E.ON-STS-Energia, which will be based in Tyumen, Western Siberia, is expected to build new power generating facilities with total capacity of 1,000 Mega Wat, requiring more than $1 billion in investment in the mid-term, the companies said in a statement.

STS, a private operator in the Russian power industry, which is expected to sell 20 billion kilo Wat/hours of electricity and receive 30 billion rubles (about $1.2 billion) in revenue during 2007, will contribute its electricity assets in the Tyumen Region in Western Siberia and the Kurgan Region in the Urals to the joint venture's charter capital.

E.ON, which sold 400 billion kilo Wat/hours of electricity and received a net profit of €5.1 billion (about $6.9 billion) in 2006, will provide advanced managerial solutions, access to Western capital and expertise in project implementation, and work on liberalized energy markets.

The German power giant said in a statement, „Entering Russia's electricity industry is attractive for E.ON. Russia's electricity market is one of Europe's largest and fastest growing, with an annual growth rate of 5 to 6%. The upcoming liberalization of the country's wholesale power sector will create an attractive business environment for investments in power generation.” (en.rian.ru)