Dubai World in $100m Russia power deal

Dubai World is guaranteeing $100 million (Dh367m) in investments in Russian electricity generator OGK-1, which is under offer from a Russian company, the head of the former power monopoly RAO UES said yesterday.

Dubai World will invest $100m in OGK-1, marking the last deal in the sell-off of former state power monopoly UES, the Russian company's chief executive Anatoly Chubais said yesterday.

With its assets sold or spun off, and a liberalised domestic power market in the works, state-owned Unified Energy System – formed in the early 1990s as a stopgap between the Soviet command system and privatisation – will cease to exist today. At a press conference marking the end of UES, Chubais said the Dubai World is guaranteeing investments in OGK-1, which is the subject of an offer of as much as $5.3bn from a Russian company, Roskommunenergo.

Chubais said the company had offered to buy OGK-1, which has big capital needs for stations in some of Russia's most energy intensive oil and gas regions, at a price of $516 per kilowatt.

Russian media have reported that Roskommunenergo was bidding on behalf of Dubai World.

UES has already spun off seven wholesale generating companies, known by the Russian acronym OGK, but an attempt to sell OGK-1 to a consortium of investors led by magnate Viktor Vekselberg failed as the group balked at its high investment needs.

Roskommunenergo's offer sent OGK-1 shares soaring 25 per cent. They stood at 2.2 roubles per share, a discount of around 15 per cent to Roskommunenergo's offer price.