Results of the work of Public JSC Far Eastern Power Generation Company are a peculiar barometer. One can make judgments on the condition of the Far Eastern economy and its climate.

For example in 2008 production of electricity has increased by 7% and for the first time reached “pre Bureya” level, a period of five years ago, when here in the Far East, Bureya Hydro Power Station was not yet commissioned. That was an indicator, speaking about high rate of economic growth in the region. As far as the first quarter of this year, all the electric power stations of Far Eastern Power Generation Company (FEPGC) have produced 6319 million kWH of electric power, what is 1% more than was planned and 5% less than during the same period of the previous “pre-crisis” year.
“These are the first after effects of the crisis, - says Mr. Valery Levit, General Director of Public JSC
FEPGC, - the enterprises of the region were feverish at the beginning of the year. Only today many of them begin to resume their production what, and we hope for it, will influence our work as well. On the other hand, during the first three months of 2009 company’s power sources produced 9651 thousand of Gig calories of heat energy what is 2.8 % more than was produced during the first quarter of the year 2008. This can be accounted for by long and cold winter. What is also very important is that the energy system has been able to withstand it without any convulsion”.
“And even on those territories, - says Mr. Levet, - where power men usually apprehend winter, like for example in Primorsky Territory, it was survived with a certain degree of safety margin”.
The company has been able to achieve a higher reliability of power supply due to realization of a number of large scale investment projects in Khabarovsk and Primorsky Territories. The most well known of them are: conversion to gas of Cogeneration Plant in Nikolayevsk and Khabarovsk Cogeneration Plant-2, capacity increase of power systems in the South of Primorsky Territory by 165 MW due to installation of gas turbine stations at Vladivostok Cogeneration Plant-2 and Artem Cogeneration Plant.
“This year, - Mr. Valery Levit says, - we did not plan such large scale investments initially. The largest 2009 project is planned at Partizanskaya State district power station in Primorsky Territory to commission a 100 MW capacity. Nevertheless we somewhat reduced our investment program for 2009 at the expense of small projects, related to reconstruction of separate parts, buildings, and structures. Today they do not affect to a great extent our production activity, and current conditions for their implementation are extremely difficult. These projects have to be realized in 2010 - 2011, as we expect the crisis to be over and to secure the growth of the Far Eastern economy it is imperative to develop and modernize the generating capacities”.
Currently the specialists of JSC FEPGC monitor how the situation on the dynamics of power consumption develops on the territory within the zone of their responsibility. Besides, here in the Far East, the percentage of wear and tear of power generating equipment is very high. Thus its work should be monitored on a regular basis and the problem itself should be systematically solved year after year.
This means that power men can not do without investments in the nearest future. And there is only one source of it currently and that is depreciation. This year we even did not plan to attract serious credit resources. Though without them, it is difficult to solve operational and seasonal issues, related to fuel procurement and summer maintenance campaign. Problems related to obtaining bank loans have affected energy sector. The cost of loans is high - up to 20% annually. But even on these terms it is very difficult to get one. This year even Khabarovsk Territory Government acted as a guarantor of financial reliability of JSC FEPGC.
However the company itself has proved its high rating of reliability. In March 2009 it bought out all bonds of the series 01 presented for redemption in accordance with an additional offer. Total amount of payments reached 4,587 billion rubles. Moreover, a few days earlier JSC FEPGC had planned a second coupon payment in the amount of 261.8 million rubles.
A significant support to
FEPGC was provided by Far Eastern Electroholding RAO Eastern Energy Systems which provided financial assistance. Besides, JSC Far Eastern Energy company which is an affiliate company, paid off promptly for the electrical power to JSC FEPGC. FEPGC fulfilled its commitments under the most difficult crisis conditions, demonstrating its honesty and reliability both on the market loan capital and to its key partners and contractors. FEPGC, with the support of RAO United Energy Systems of the East and JSC FEEC confronted very difficult financial challenge, and now plans to return to the financial market as soon as the situation is stabilized, and investors will be willing to buy bonds of highly reliable companies.
According to Mr. Valery Levit, the company intends already in the first half of this year to place its next issue of bonds amounting to 5 billion rubles.
To date, FEPGC is not in a crisis situation. However, to avoid it in principle, the company has developed its own anti-crisis plan.
“We, - says the General Director of FEPGC,”- implement a set of measures to save on costs of incidentals. We developed a tougher approach to procurement. We try our best that there will be no price increases for materials in comparison with the previous year. This is a big saving item”.
This year power men had to even apply to the Federal Antimonopoly Service to solve the problem of unjustified increase in prices for coal from the major suppliers. True, it did not come to serious litigation, as we were able to achieve peaceful solutions with the suppliers”.
“We probably will have to decide and reduce the working week, and non- specialized staff, - said Mr. Valery Levit. - But we, by all means, seek not to affect our team by our anti-crisis measures. Because, unlike other industries, in energy industry it is not possible to close a Cogeneration plant for a couple of months and wait till the end of hard times. It is impossible to send on vacation specialists, who must be on the round-the-clock shift at the plant.
In addition this year FEPGC concluded a new collective agreement with their employees for 2009-2011. We managed to retain in it all previously-won social guarantees.
Obviously, the power men intend to save more on fuel rather than on people.
In the first quarter of this year - says Mr. Valery Levit, - we burned significantly less fuel at our station than in the first quarter of 2008, even without taking into account the gasification of Cogeneration plant in Nikolayevsk and Khabarovsk Cogeneration plant-2. At all our stations, on the average, reduction in the consumption of oil fuel has more than doubled thanks to improving the operation of the equipment, and thanks to high requirements to our staff”.
By the way, the effect from gasification, completed last year in Khabarovsk Territory, power men observed during this heating season, but it was less than we expected. This was due to the 30% increase in gas prices, the value of the contract which is pegged to dollar rate. If last year, gas was cheaper to use than coal, it is the opposite this year. In anticipation of this situation, the stations kept the technology using both fuels.
“So, there, where there is a possibility to choose alternative fuel, we use it, - says Mr. Levite. - And in the first quarter we reduced gas consumption at our several plants”.
With regard to financial results of the last year, they did not please power men. Virtually the only reason of loss was the cost increase for rail transportation and oil price. Even the crisis itself at the end of the last year, according to Mr. Valery Levit, did not affect the company.
”This year, - says General Director of FEPGC- we made a business plan, which envisages small profit.
Power men anticipate that the economic crisis will not make significant adjustments in their plans.