United Engine Corporation, GE, and INTER RAO UES Create a joint enterprise to Produce Gas Turbines

Sochi, September 16, 2011 — United Engine Corporation, General Electric, and INTER RAO UES have signed an agreement to create a joint enterprise in the Yaroslavl region to produce and launch high-efficiency, low emissions 6FA industrial gas turbines with a capacity of 77 mW.

The shares in the new enterprise will be distributed in the following way: 50% — General Electric, 25% — INTER RAO UES, 25% — UEC. The board will be comprised of two representatives from GE, and one each from INTER RAO UES and UEC. The chairman will be one of the GE representatives. Operational management will also be GE responsibility.

The cost of building the factory to produce turbines is estimated at 5 billion rubles, which will lead to the creation of a business with several billion dollars worth of turnover. The project will be financed by a combination of the participants’ own funds, and attracted investment. Work is expected to commence at the end of 2011 and finish in 2013.

The factory capacity is planned at 14 units per year, with the potential to expand it to 20 units per year. The turbines are aimed to meet the growing demand for mid-sized power units for combined heat and energy projects. The creation of a joint enterprise in addition to technology sharing by GE will enable the development of a local supply chain and production within Russia.

“The creation of a joint enterprise with GE and UEC is an important step for the development of INTER RAO UES engineering business. At present, both within Russia and abroad, demand is growing swiftly for modern combined units with high thermal efficiency. They are ideal for building new combined cycle electric generating plants, as well as for refitting old combined heat and power plants.

INTER RAO intends to use turbines produced by the joint enterprise in its own installations, resulting in a high degree of synergy, as well as enabling the promotion of new equipment on Russian and foreign markets. This will transform the company into one of the biggest players in the engineering industry, which meets the company mid-term development strategy,” explained INTER RAO UES chairman Boris Kovalchuk.

“The creation of these two joint enterprises will enable GE development both in Russia and as a whole,” said GE Russia president and CEO Ron Pollett. “Such long-term strategic opportunities strengthen GE position in Russia and confirm our global leadership in energy and healthcare.”

UEC general director Andrei Reus announced: “The corporation strategy envisages the realization of new, efficient business directions and the expansion of the range of implementation of the technologies we already have, particularly by developing joint projects with leading global businesses. The corporation is already running such programs in the fields of helicopter building, engine-building, drone aircraft, and servicing. We consider today’s agreement to be an important event for the Russian high-tech sphere, one which demonstrates a new level of cooperation between our country and global partners. The creation of a joint enterprise will bring new technologies onto the market and expand access to servicing that complies with high, world-class quality standards. We will strive to expand our cooperation, including by gradual expansion of localized production in Russia.”

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OAO United engine corporation managing company is the Russian leading industrial group producing engines for civil and military aviation, rockets, units of 25 to 110 mWs for producing electrical and heat energy, and gas transport and shipboard gas turbine units. More than 85% of enterprises specializing in the development, mass production, and servicing of gas turbine technology are integrated into UEC structure as well as the core enterprises. One of UEC priority areas of business is the realization of comprehensive programs to develop enterprises in the field, with implementation of new technologies that conform to international standards.

General Electric has been working in Russia since the beginning of the 20th century, when the company participated in GOELRO, and supplied the first diesel locomotives and oil and gas equipment in the country. Today all of GE subdepartments are represented in Russia, working in fields such as healthcare, transport, aviation, electrical energy, oil and gas, water purification, lighting technology, as well as finance and media. GE Russia headquarters are in Moscow, it has a staff of 2,700, and 2010 sales amounted to more than 1.5 billion USD. There are two training centers in Russia to train specialists in the fields of medicine and electrical energy.

OJSC INTER RAO UES is a diversified energy holding present in various segments of the electrical energy industry in Russia and abroad. The company holds a leading position in Russia as an importer-exporter of electrical energy, is actively developing its presence in generation and sales, and is also developing new business directions. INTER RAO UES strategy is aimed at creating a global energy company, one of the key players on the global energy market. The total capacity of all the energy plants belonging to the INTER RAO UES group and under its management amounts to about 29,000 mW.

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