Rusal plans to buy Bogoslovsk power plant in 2013

Russian aluminum company UC Rusal plans to buy the Bogoslovsk Combined Heat and Power Plant from IES Holding in 2013, the Director of Natural Monopoly Relations at Rusal Maxim Balashov told reporters.

"We plan to close the deal this year as soon as we agree on a price," he said.

The asset was already appraised two years ago, but "in our opinion," the valuation was overstated, he said.

Rusal said later that talks with IES Holding regarding the possibility of buying the plan were ongoing and that a final decision had not been reached. "Information that Rusal has reached agreement on the purchase and that the sides have reached a decision is not accurate as of the moment," the company said in a statement.

In December 2011, after Rusal started to gradually power down the electrolysis baths at the inefficient areas of the Bogoslovsk Aluminum Smelter, it developed several measures, together with the Russian government, aimed at stabilizing operations at the enterprise.

One of the measures was for Rusal to purchase the Bogoslovsk CHPP, which at that time was the key supplier of steam and electricity for the smelter, from IES Holding. Rusal would also build the Novo-Bogoslovsk CHPP under a capacity supply contract. However, the parties were unable to come to an agreement on the parameters of the deal due to differences in opinion over the value of the Bogoslovsk and Novo-Bogoslovsk CHPPs.

The problem was partially solved via a contract with OJSC Concern Rosenergoatom for electricity supplies from the Beloyarsk Nuclear Power Plant in 2013-2014 at the cheap price of just 3 cents per kilowatt hour. The parties wanted to address the issue of steam supplies by entering into a long-term contract with IES Holding.