The Quadra purchase is over. Rosatom bought power plants and thermal power plants in the region with one of the highest tariffs. Experts believe that part of the generation will go under the knife in order to receive state funds for new construction projects of Rosatom. Is it normal?
There was a lot going on in this deal. The Federal Antimonopoly Service, which had previously prevented Prokhorov from selling Quadra in every possible way, pointing out that the purchase would lead to a violation of competition in the wholesale electricity market, remained silent during this transaction. No one seemed to remember about the heat and energy market, with its ever-growing prices.
The state-owned company apparently buys a private trader at a price that is higher than what can be earned from it, using standard current revenue multiplier models. The official price has not been announced, although how can this be with a state-owned company? The deal of the state corporation is absolutely non-transparent.
Experts call the price of the transaction for the acquisition of 82.5% of the shares at 26 billion rubles, and on the stock exchange they estimate the value of Quadra at only 12.8 billion rubles. Overpaid more than twice! Apparently, someone will roll back something to someone, or maybe the price was simply inflated “by mistake”? Or maybe Rusatom Infrastructure Solutions, which is part of Andrey Likhachev’s Rosatom, will be able to use this asset in some other way than the rest? We do not have any confirmation of the “gray” transaction schemes. But market experts are discussing the dubious and very strange way how the nuclear corporation is going to make money on non-core Quadra at the state expense.
Something incredible is happening in the electricity market. In 2021, with a decrease in demand associated with a slowdown in the economy, electricity prices are rising by leaps and bounds. The trend is observed even in the Chernozem region, with excess generation! But this paradox of the market is not all we can surprise you with.
Since the reforms of Anatoly Chubais, many systemic errors have been laid in the electric power industry. One of them is the payment for additional capacities. At a certain stage, this was required to introduce new generations and attract investors to the industry. And now it has become a technology for obtaining state funding, loosely connected with the needs of the market. Thus, the closure of part of the capacity of Quadra can be cost-effective only because of state subsidies. We will explain in more detail below.
A large private electricity producer, the Quadra company, which owns 20 power plants and 319 thermal power plants, is being bought by Rosatom under the control of Andrey Likhachev. At the same time, the GK is considering the possibility of getting rid of “inefficient generation”. “Inefficient generation”, according to the management of Rosatom, is 1.1 GW of inefficient gas stations (about 1/3 of the total installed capacity of “Quadra”). According to capacity supply agreements (CDA), 8 stations will remain in operation, as they receive increased payments for capacity. They are going to feed the freed market with new nuclear power plants. Rosatom has already approved contracts for the launch of two power units of the Kursk NPP. Withdrawal of “inefficient generations” will make it possible to launch and recoup new power units faster, and at the same time receive funds under the state financing program mentioned above.
It turns out that the state corporation, which specializes in nuclear generation, buys capacity in order to … close part of the power plants? This is confirmed by sources close to the deal, interviewed by Polina Smertina from Kommersant: “The state corporation is considering the possibility of withdrawing part of the Kvadra power plants and replacing them with generation from new nuclear units.”
This is “cannibalism”, and not just a commercial approach – to “gobble up” one production or know-how in order to ensure the efficiency of another production. There are similar examples in private foreign countries. But they earn on their customers, and not on government funding like Rosatom.
PJSC “Quadra – Power Generation” provided 25% of heat and electricity in Central Russia, competing with other suppliers. Now, businesses and residents of 11 central regions (which are Smolensk, Kaluga, Tula, Ryazan, Oryol, Lipetsk, Tambov, Kursk, Voronezh, Bryansk and Belgorod regions), in all likelihood, will have to tighten their belts.
As a result, Rosatom has gained a comfortable position in the heat business and is consolidating its position in the largest regional heat market in Central Russia. And at public expense. Now the state corporation is present in all generation segments – from gas boilers to wind farms. And, most likely, the capacities of PJSC “Quadra – Power Generation” are not really needed by Rosatom.
I really want to exclaim: “Have you tried to compete in the market at the expense of price and the benefit of consumers?! Or is it just cutting state funds is all you know how to do?”.
But the plans of the state corporation go much further…
In addition to a significant gesheft for the introduction of additional capacities, Rosatom will receive huge funds under the FTP “New Nuclear Energy” from the bins of the Motherland – the National Wealth Fund (National Welfare Fund). Last summer, the Government decided to allocate 79.9 billion rubles in 2021-2024. (of which 55.9 from the National Welfare Fund) for the Rosatom program “New Nuclear Energy”. The total amount of funding for all initiatives is 504.8 billion rubles. from the budget, as well as 232 billion rubles. from the FNB.
Given the future state funding of half a trillion rubles, the purchase of Quadra for the GC is simply a “trifle”.
Former presidential candidate Mikhail Prokhorov sold one of his last major industrial assets in Russia to Rosatom. The billionaire continues his asset sale campaign started back in 2016.
PJSC “Quadra – Power Generation” is practically the last major industrial asset of a businessman and a failed politician.
In 2016, Prokhorov’s Onexim sold a 20% stake in Uralkali. And in October it became known that Onexim would sell 12% of UC Rusal for $700 million. In December, it was announced the closing of another deal to sell 90.99% of OPIN’s shares to the Rossium concern.
In June 2017, Onexim sells a 65% stake in RBC and the Snob publication.
At the beginning of 2018, Prokhorov “got rid” of Rusal shares at a good discount to the market price.
In March 2020, it was announced that Prokhorov had sold a 35.84% stake in International Financial Club (IFC) bank to Tatyana Orlova.
In 2021, the infamous Yo-Mobile project of Prokhorov’s Yo-Engineering company “got” Herman Gref’s Sberbank. True, Mikhail Prokhorov himself prudently left the project back in 2014. “Yo project” cost Prokhorov, according to some sources, about 150 million euros. But why did Gref need this project? Well, yes, it’s nonsense, because I didn’t buy it out of my own pocket. Gref, it seems, tends to buy everything “that is not nailed down” for Sberbank’s money.
Quadra and Renaissance Credit Bank (45th in the financial rating in Russia) remained Prokhorov’s last major assets after a large-scale sale. Now Quadra has also been sold, and interesting events are taking place around the bank.
In January 2021, Treasurer-Finance LLC became the owner of Renaissance Credit Bank. Which is owned (99.99%) by the Cypriot company Doosti Enterprises Limited, and 100% of whose shares are owned by Onexim Holdings Limited. And the sole shareholder of Onexim Holdings Limited is Prokhorov Mikhail Dmitrievich.
And on December 23, 2021, it became known that the last financial “stronghold” of Prokhorov was put up for sale. Several sources in the financial market told Kommersant about this. Interlocutors of the publication, close to the parties to the transaction, say that the bank is negotiating with Sovcombank. According to sources, the transaction price may be 0.7-0.8 of the bank’s capital.