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INTER RAO UES, General Electric and United Engine Corporation establish a joint venture to manufacture gas turbines

Published on Oct. 4, 2011

INTER RAO UES, General Electric and United Engine Corporation establish a joint venture to manufacture gas turbines

INTER RAO UES, General Electric and United Engine Corporation signed an agreement to establish a joint venture in Yaroslavl Oblast to produce and market high-efficiency 77 MW gas turbines with low 6FA emissions.

General Electric will hold a 50% stake in the JV; while INTER RAO UES and UEC will have 25% each. The Board will include two directors nominated by GE, one director nominated by INTER RAO UES and another one nominated by UEC. The nominated director by General Electric will serve as the Chairman. General Electric will also be responsible for operational management of the company.

Approximately 5 billion rubles will be invested in a new turbine manufacturing facility with expected annual revenues of a few billion dollars. This project will be financed using partners' own and borrowed funds. Construction is scheduled to start in late 2011 to be complete in 2013.

The new facility is projected to build 14 gas turbines per year with a possible increase to 20 units. The turbines are designed to satisfy the growing need for mid-sized generating units for combined heating and power production projects. Besides providing access to GE technologies, the newly established joint venture will driver development of a local supply chain and eventually support production of components in Russia.

"Establishing a joint venture with GE and UEC is an important step forward in development of INTER RAO' engineering business," said INTER RAO UES CEO Boris KOVALCHUK. - "There's a strong growth in demand for modern high-efficiency cogenerating units both in Russia and abroad. They are an ideal choice for the new steam/gas power plants as well as for retrofitting legacy steam/gas combined heating and power plants. INTER RAO is looking to use the turbines manufactured by the new JV at our own facilities to create synergies and promote the new equipment in Russia and internationally. This will help us evolve in a large player in the engineering market fully in line with approved corporate development strategy."

"Establishing this JV will be beneficial for development of GE and Russia as a whole," said GE Chairman and CEO Jeffrey IMMELT. "These long-term strategic opportunities increase GE's footprint in Russia and reinforce our global energy leadership. Increased GE's presence in Russia is a result of our global approach to growth suggesting transfer of GE's global R&D, engineering and manufacturing expertise to satisfy the needs of our customers and contribute to development of local markets. This will also create new jobs in both countries."

UEC CEO Andrey REUS said, "Our corporate strategy targets development of new efficient businesses and enhanced application of existing technology competencies including joint projects with global business leaders. We are already implementing similar programs in helicopter industry, propulsion engineering, unmanned aerial vehicle industry, and maintenance services. The new JV will provide access to new engineering and manufacturing solutions and increase availability of maintenance services meeting the highest international quality standards. We are hoping to expand our cooperation, partly through gradual transition of manufacturing activities to Russia."

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