ICBC provides $399.7 million loan for 482MW Teninskaya Gas Steam Combined Cycle Power Project

On May 6, 2010, Public Joint-Stock Company Territorial Generating Company No. 2 (JSC ‘TGK-2’) and China Huadian Hong Kong Co., Ltd. signed a a memorandum of understanding regarding the 482MW Teninskaya Gas Steam Combined Cycle Power Project. Then, on December 30, 2011, Public Joint-Stock Company Territorial Generating Company No. 2 (JSC ‘TGK-2’ or TGK-2) and China Huadian Hong Kong Co., Ltd. created a special purpose vehicle (SPV) and joint venture called Limited Liability Company ‘Huadian-Teninskaya Combined Cycle Power Plant’. JSC ‘TGK-2’ holds a 51% ownership stake and China Huadian Hong Kong Co., Ltd. holds a 49% ownership stake in the SPV. The purpose of the SPV was to procure, construct, install, and operate a new gas-fired combined-cycle co-generation power plant with a capacity of 482 MW in Yaroslav Oblast. The total cost of the 482MW Teninskaya Gas Steam Combined Cycle Power Project was $571 million and it was financed according to 70:30 debt-to-equity ratio. On January 18, 2013, ICBC and Limited Liability Company "Huadian-Teninskaya Combined Cycle Power Plant" signed a $399,777,000 (approximately 14 billion rubles) facility agreement for the 482MW Teninskaya Gas Steam Combined Cycle Power Project. The loan carried the following borrowing terms: an 11 year maturity, a 2.5 year grace period, an interest of 6-month LIBOR plus a 3.95 margin (4.11% as of January 2013), and a commitment fee of 0.8%. The parties agreed that repayments would be made in 19, semi-annual installments of $28,555,500 between June 1, 2015 and December 1, 2023. The proceeds of the loan were used to finance the procurement, construction, installation, and operation of a new gas-fired combined-cycle co-generation power plant with a capacity of 482 MW in Yaroslav Oblast. JSC “TGK-2” pledged its 51% ownership stake as as a source of collateral to ICBC. The borrower also purchase credit insurance from Sinosure. The first tranche of the loan (worth 4.5 billion rubles) was disbursed on December 30, 2013. The second tranche (worth 1.88 billion billion rubles) was disbursed on September 15, 2014. The third tranche (worth 5.76 billion rubles) was disbursed on January 20, 2016. JSC ‘TGK-2’ and China Huadian Hong Kong Co., Ltd. were jointly responsible for implementation. A foundation-laying ceremony took place on September 7, 2011. Construction began on June 18, 2012. The launch of the power plant was originally planned for 2014. However, the local authorities agreed to postpone its commissioning until December 31, 2016. Then, in January 2017, the opening of the facility was delayed by the Russian government for violations following an inspection. The facility was charged 78 million rubles for each following month the launch was delayed. The plant was ultimately put into operation on June 20, 2017. The plant now generates 3.02 billion KWH of electric energy and 814,000 Giga of heating supply annually. It has reportedly reduced Yaroslavl Oblast’s power deficit from 40-50% to 5-15% and it fully meets electricity demand during the winter season. The facility was built under a capacity supply agreement (CSA), which allows for a guaranteed return on investment, but includes penalties for delays in the opening o the facility.

Additional details

1. The Russian project title is Хуадянь-Тенинская ТЭЦ. 2. The borrower (Limited Liability Company "Huadian-Teninskaya Combined Cycle Power Plant”) of the ICBC loan is also known as ООО «Хуадянь-Тенинская ТЭЦ» or LLC Huadian-Teninskaya Combined Cycle Power Plant. It was jointly established in December 2011. 3. Public Joint-Stock Company Territorial Generating Company No. 2 (JSC “TGK-2” or TGK-2) was established in April 2005. TGK-2 is one of the largest heat power companies in the North-West and Central Federal Districts of Russia. TGK-2 produces electricity and heat and sells heat (steam and hot water) to consumers. Its majority shareholder is Sintez Group (a privately owned company in Russia). 4. The November 2013 mortgage agreement between TGK-2 and ICBC can be accessed via https://www.dropbox.com/s/ber6glvp2poado9/Mortgage%20Agreement.pdf?dl=0. The pledge of participation interest between JSC "TGC-2" as pledgor and Industrial and Commercial Bank of China as Pledgee, dated November 18, 2013, can be accessed via https://www.dropbox.com/s/jbkpemvskjkep0y/PLEDGE%20OF%20PARTICIPATION%20INTEREST%20BETWEEN%20JSC%20%22TGC-2%22%20AS%20PLEDGOR%20AND%20INDUSTRIAL%20AND%20COMMERCIAL%20BANK%20OF%20CHINA%20AS%20PLEDGEE%2C%20DATED%2018%20NOVEMBER%202013.pdf?dl=0.

Number of official sources

25

Number of total sources

35