Fourth Generation Company of the Wholesale Electricity Market (OGK-4) has entered into agreements with ABN AMRO Bank N.V. and Citi International PLC, London for establishment of unsecured irrevocable standby letters of credit. The letters of credit will be in favor of the general contractor engaged to construct the CCGT-400-based power unit of Shaturskaya GRES, an OGK-4 branch. The general contractor is the consortium of General Electric International Inc. (USA) and Gama Guk Sistemleri Muhendislik ve Taahhut A.S. (Turkey). ABN AMRO and Citi were appointed as LC issue banks based on the competitive negotiations held by OGK-4.
Under the contract, Citi as the issuing bank will open a $70,105,000 standby letter of credit in favor of General Electric. ABN AMRO will extend an €89,000,000 standby letter of credit to Gama. The letters of credit will be valid through late November 2009. A standby letter of credit is an instrument issued by banks, securing the performance by the customer of its obligations under international contracts.
“The agreements with ABN AMRO and Citi for establishment of letters of credit is a notable event in Russian electricity industry,” OGK-4 Director General Andrey Kitashev said. “For the first time, foreign banks provide letters of credit for such a huge amount under an investment project for the construction of new power generation facilities, which proves the company financially reliable.”
In July 2007 OGK-4 signed the EPC-contract for the construction of a CCGT-400 power unit at Shaturskaya GRES with the General Electric-Gama consortium. The contract price was $83,630,000 and €219,000,000 (exclusive of VAT and customs fees).
The investment project for the construction of a new CCGT-based 400-MW power unit of Shaturskaya GRES (Moscow Region) is included on the List of primary power generation facilities of the Unified Power System of Russia. It is planned to put the power unit into operation in the 4th quarter of 2009. The project cost is estimated at 15 billion rubles.