26.01.2022

Novosibirsk Mayor’s Office wanted to give the heating system to private hands

Information about the new concession of SGK has been procrastinating for the second month already – the first question was why a new one is being concluded if the company did not fulfill all its obligations under the old contracts .

The next concession is planned to be concluded not for 6 years, but already for 10. This means that by 2031 the entire heating system of the city will be in private hands.

What is a heat concession, why are there so many questions to the new agreement and how is this related to heat tariffs?

How the concession with SGK was terminated in Novosibirsk

In February, the Novosibirsk Mayor’s Office, MUP Energia, the regional government and SGK canceled two concessions ahead of schedule, according to which SGK had to invest more than 600 million rubles in the repair of heating networks and boiler houses in the city in six years. It invested, but not all – the company did not fulfill part of its obligations, however, it must pay compensation for this in almost 240 million rubles. Despite the fact that the term of the concession has not yet expired, the agreement was called “irrelevant”. A new concession agreement is now called topical, which is planned to be concluded not for 6, but already for 10 years – the so-called “big concession”, which raises many questions, for the discussion of which they even created a separate working group of deputies of the Legislative Assembly.

Concession – what does it mean

Concession is a type of agreement on the creation or reconstruction at the expense of the investor (or together with the grantor) of property (usually real estate) owned by the state, as a result of which the investor is able to operate the facility on a reimbursable basis, collecting income for his own benefit. A concession agreement is a form of public-private partnership, involving a private company in the effective management of state property or in the provision of services usually provided by the state on mutually beneficial terms.

To put it simply: for example, the mayor’s office leases its property to a private company so that this company will put it in order, spend its money on its maintenance and, accordingly, receive all the profit from it. That is, the property remains in the ownership of the mayor’s office, but is operated by a private owner (for the duration of the concession agreement). As a result, everything should work, while the mayor’s office does not bear any costs during this period.

A recent example of a concession is the Sanduny and Fedorovskie Baths. Now these are not city baths with a certain number, but private ones for a certain period – with their own rules and prices. True, under the terms of concession agreements, they have visiting days for beneficiaries.

How is the heating system in Novosibirsk

CHPs or boiler houses generate heat, which goes through the heating networks to the central heating station, and then through the intra-quarter networks the heat reaches the consumer.

Today, part of the thermal complex is at the disposal of the city, and part is in the ownership of the Siberian Generating Company. SGK is engaged in the generation of thermal energy and the transportation of this thermal energy to the nodes. Heat from the nodes is supplied to buildings (batteries) through intra-quarter networks, which are now owned by the municipality (under the jurisdiction of MUP Energia).

How the heating networks ended up in private owners

Part of the city’s thermal complex passed into private hands back in the 90s, during the era of privatization. It all started with the fact that the mayor’s office took out a loan and pledged the property of the heat and power complex. When the loan could not be repaid, the collateral had to be returned. Part of the property passed to a private owner, and something remained with the city.

Vitaly Tomilov, the former general director of Novosibirskenergo JSC, told Continent-Siberia in 2017 about how Novosibirskenergo passed into the hands of SIBEKO:

– The governor of the region Vitaly Mukha (he was the head of the region from 1991 to 1993 and from 1995 to 1999) met with Abyzov (in the mid-90s he was an assistant to the State Duma deputy Ivan Starikov) on the eve of the sowing season. Mucha himself told me this. Abyzov promised him to supply fuel in the required amount, for which the governor promised to pay off with a bill. As a result, Mikhail secured the supply of fuel and received Mukhu the debtor. He took advantage of this situation. During his next visit, the governor offered him a 30% stake in Novosibirskenergo. At the same time, the debt was incommensurate with the price of shares, – Tomilov told the publication. – Then there was no question of any market value. And then Mikhail easily bought up the remaining stake. I also sold my shares. I remember that he created the Tantema company, which bought up the shares of Novosibirskenergo.

Mikhail Abyzov is a businessman, former Minister for Open Government Affairs. In the 1990s, he was an assistant to the deputy of the State Duma of the Russian Federation from the party “Russia’s Choice” Ivan Starikov, who since 1995 held the post of Deputy Minister of Economy of the Russian Federation. At the same time, Abyzov was engaged in mutual settlements of the fuel and energy enterprises of Siberia, including the Novosibirsk plant of chemical concentrates. Abyzov headed a number of energy companies, acquired shares of the companies Novosibirskenergo, Novosibirsknefteprodukt, Sibirgazservice. In March 2019, Mikhail Abyzov was arrested by a court in Russia on charges of embezzling and transferring 4 billion rubles abroad.

The Siberian Energy Company Joint Stock Company (SIBEKO) was established on March 18, 2004 (formerly the Novosibirskenergo Closed Joint Stock Company), according to the SGK website.

In 2017, there were rumors that they wanted to sell SIBEKO. In the same interview, Vitaly Tomilov named the owners of the power systems of Tomsk and Omsk “Inter RAO” as potential buyers. But, in his opinion, energy assets did not generate much interest due to low profitability and close interaction with the social and political spheres. Nevertheless, a buyer was found.

How the Siberian Generating Company came to the city

In 2018, the Siberian Generating Company became the new owner of SIBEKO.

– With the acquisition of SIBEKO, SGK will increase its share in the generation of heat and electricity beyond the Urals. After the transaction is closed, the company’s business will grow one and a half times, – then the new owners of SIBEKO, SGK, said.

The Siberian Generation Company is one of the largest private energy companies in Russia. Prior to the purchase of SIBEKO shares, the holding operated only in the Altai Territory, Kemerovo Region, Krasnoyarsk Territory, and the Republics of Khakassia and Tyva. SGK stations account for about 23–25% of heat and electricity generation in the Siberian energy system. Now the head of the company is Stepan Solzhenitsyn, the son of the writer Alexander Solzhenitsyn.

Today, SIBEKO JSC (in the structure of SGK) includes four Novosibirsk CHPPs (CHPP-2, CHPP-3, CHPP-4, CHPP-5), as well as boiler houses operated by SIBEKO JSC.

First concessions with Novosibirsk

The first concession agreements with the city were signed at the end of 2017, even before the purchase of SIBEKO by SGK. The contract detailed the work plan for each year. There were two concessions – one for boiler houses, the other for the routes adjacent to them. These concessions are called 13th and 14th – just their ordinal numbers for the city.

The mayor’s office handed over 26 heat supply and hot water supply facilities to the company: boiler houses and heating networks of Novosibirsk, Pashino and ObGES with all their property. It was assumed that the concessionaire should spend up to 481.3 million rubles on the reconstruction of boiler houses, and up to 173.8 million rubles on heating networks.

Then the mayor’s office clarified that SIBEKO’s profit will be further included in the tariffs, which are coordinated by the tariff department of the Novosibirsk region. And if the concessionaire for some reason does not receive the planned income, the losses will be reimbursed at the expense of the regional budget. In turn, the deputy of the City Council Natalya Pinus said that the document is not transparent, for example, it is not clear from it in what cases penalties will be applied to the concessionaire.

After the concession

That is, in six years, until 2023, SGK was supposed to reconstruct and maintain the constructed facilities. For the same period, a lease agreement for municipal property was concluded.

The company decided to gradually abandon boiler houses and switch consumers to the power of the CHPP. For example, the Kalininskaya boiler house: it took several months and one hundred million rubles to reconnect it to CHPP-4, according to SGK.

“The current heat supply scheme for the city dictates a civilized approach to the energy sector: there should be fewer chimneys, and the cost of heat should be lower,” says the quote from Aleksey Zakovorotnykh, Deputy General Director for Construction and Repairs of the Novosibirsk Heating Network Company SGK. He explained that the boiler house is being taken out “in reserve” in case of emergency situations and peak loads.

According to the information on the SGK website, a total of 10 boiler houses were transferred to the power of Novosibirsk CHPPs in 2018. Alexey Zakovorotnykh explained that the company is interested in new consumers, an increase in heat supply volumes. In addition, he reminded, this is the company’s earnings.

In the same year, SGK begins testing brown coal at CHPP-5. The transition to brown coal caused a violent reaction from society. The new owners of SIBEKO said that it was safe, that it would not in the least worsen the ecological situation in the city, and gradually other CHPPs would be transferred to this type of fuel. At the beginning of 2021, environmental supervision found violations in the transfer of SGK boilers to brown coal – power engineers were accused of not modernizing the boilers before using a new type of fuel. Power engineers protested the order of Rostekhnadzor, but began modernization.

In July 2019, the cost of heat and water increased in Novosibirsk. This was the second increase in a year. Prior to that, payments for water, sewerage and heating were raised on January 1, 2019. Later, the court ruled that the increase was illegal.

SGK regularly reports on how the work is being done in the media: what, why and how much money is spent on it. Andrei Kolmakov, director of the Novosibirsk branch of SGK, stressed that initially 1 billion 718 million rubles were allocated for the repair of Novosibirsk generating facilities in 2018. But during the execution of the work, the power engineers identified “bottlenecks”, new problem areas, and the management of the Siberian generating company decided to close all the needs of the Novosibirsk stations by allocating additional funding.

Everything went according to plan, but at the end of last year, the previous concession agreements were called out of date. The question arose about concluding a new, “big” concession – not for 6 years (a little more than 3 years have passed since the previous ones were concluded), but for 10 years.

Why do we need a new “big” concession

The reason for the “irrelevance” of past concessions is explained by good intentions – I want to invest more in pipe repairs, but I have to spend on renting what is owned by the municipality.

At the end of last year, the company’s specialists said that it was necessary to spend at least 20 billion rubles in order to significantly increase the scale of repair of heating networks in the city. Moreover, the results of such repairs will be noticeable only after 5 years.

– The company proposes to the mayor’s office to transfer the municipality’s heating network complex to it on a 10-year concession with an investment volume of 5.5 billion rubles for this period. But this requires revising the operating conditions: one lease agreement and two concession agreements should be replaced with a single concession agreement, explained the SGK company.

That is, under the new agreement, SGK will no longer pay for the lease of municipal property; this means that, in fact, the entire thermal complex of the city will pass into private hands.

Who will remember the old

On January 26, 2021, the authorities and the company entered into an amicable agreement (transition from breaking old concessions to concluding new ones). Under this settlement agreement, SGK will pay the city almost 240 million rubles (since it did not have time to fulfill its obligations under the old ones). The coordinator of the “Crippled Novosibirsk” movement in his author’s column on the NGS pointed out that after the termination of the concession, Novosibirsk did not count in millions, since the money for the concession was included in the heat tariffs, that is, the townspeople had already paid part of the money, but the company did not work. spent.

“Moreover, the tariff for 2018–2021 includes more amounts than was spent and received under an amicable agreement. The difference between what SIBEKO collected and what he returned and spent is 26 million rubles, – Mikhail Ryazantsev calculated.

However, SGK denied additional tariff increases to return its investment. The company stressed that the settlement agreement was approved by the court, which took into account the circumstances and interests of the parties.

– Under the terms of the amicable agreement on early termination of concessions, SIBEKO will pay the city 239.2 million rubles and in favor of the municipal unitary enterprise – 66.1 million rubles (including VAT) – for equipment. We will also transfer the property of two block-modular central heating stations and heating supply networks along Chulymskaya and Yeltsovskaya streets, for which SGK spent more than 50 million rubles, into the ownership of the municipality. This amount was requested by the municipality, and the SGK fully accepts this decision, – said the SGK. – Thus, not a single unaccounted ruble exists. And we exactly execute the court decision on the approval of the settlement agreement, we guarantee transparency at every stage of transferring money to the budget and revising tariffs.

SGK plans for a new concession

The new concession agreement is planned to be concluded for 10 years. The volume of investments of SGK under this agreement is 5.5 billion rubles. The company plans to invest so much money in the repair and construction of new heating networks.

According to SGK, 70.4% of heating systems in Novosibirsk need to be replaced. The money will be spent in several ways.

Under the terms of the agreement, the company plans to invest 1 billion 998 million in technical re-equipment and reconstruction of intra-quarter heating networks with a total length of 50 km.

1.4 billion rubles will be invested in similar work on main heating networks with a length of 18.5 km.

1.2 billion rubles are planned for the reconstruction of 129 central heating stations, including the restoration of hot water circulation.

They decided to spend 900 million on the construction of eight new gas block-modular boiler houses. SGK also plans to build 3.2 km of new heating networks in order to transfer heat consumers from the boiler houses of the Novosibirsk Electric Locomotive Repair Plant to CHPP-5.

Questions for the new concession

The draft of the future concession was presented to the Council of Deputies, however, as deputy Natalya Pinus explained, it is rather a gesture of goodwill. Formally, the mayor’s office is not obliged to agree on a concession agreement with the deputies, despite the fact that we are talking about agreements that affect many areas, including budgetary and social. In addition, the deputy stressed, such transactions have tariff consequences.

Natalya Pinus stated that the topic is very complex, perhaps that is why none of her colleagues dived deeply into it. According to her, the presented concession agreement contains several points that raise questions (which were formulated after consultations with serious professionals in this area, the deputy stressed).

First: the investor will invest 5.5 billion, which he will take from the tariff. And the profit will be about 8 billion.

– Based on the calculations that we made, about 8 billion is included in the rate of the concessionaire’s normative profit. This is also tariff money, – the deputy explains. – The SGK said that the figure does not correspond to reality. But I have links to the appendix to this agreement, where we got these numbers from. Another thing is, maybe they said that it does not correspond to reality, because it is higher. In turn, I sent requests, what, if not so, then what. They don’t speak.

To put it simply: the concessionaire plans to spend 5.5 billion, make a profit of 8 billion, which must also be secured by the tariff. The question is why 8 billion?

Second: according to Natalia Pinus, the heating networks are given to the city with a wear rate of 74%, and returned to the city with a wear rate of about 79% (approximately).

– Here you need to understand that in parallel with the fact that there is an investment of funds, there is an increase in wear and tear in principle. Even these results are not compensated in any way, – the deputy noted.

Third: a question about the long-term tariff.

– We discovered that long-term tariff plans were not issued by the tariff department, and only now the tariff department saw these plans, which are included in the concession agreement, although they should initially come from it. Obviously, they will not be like this, and what they will be is not yet clear. But what they presented to the deputies, it is not clear who invented the numbers. And here the question arises – what was presented to the deputies and what relation it has to reality, – explains Natalya Pinus.

Fourth: Natalia Pinus noted that there is no third party in the concession agreement – according to the law, an agreement cannot be concluded without a third party. The third party should be the region represented by the governor.

– The constituent entity of the Russian Federation represented by the governor of the NSO in this agreement bears the obligation to establish long-term tariffs and approve the investment programs of the concessionaire, – the deputy explained.

Fifth:

– I am embarrassed that faster, faster, in June-July it is necessary to conclude this agreement. Because the lease term for the mayor’s office is coming to an end. I am worried that in this regime of high haste, decisions will be made that concern the entire city, the townspeople – in a topic that is difficult to understand, – says Natalya Pinus.

In addition to the haste, according to her, there is one more incomprehensible moment with the property that will be built during the concession period. She pointed out that it is not clear from the agreement who it will be in the end.

To put it simply: within 10 years SGK will repair and build something new. After 10 years, the concession ends, the property must be returned to the city. Will that new, built by the company be returned? Whose property will it be?

How will all this affect tariffs?

Now the method of forming the heat tariff is “Costs plus”, explained Natalia Pinus.

– It means that what the heat generating company spent on the maintenance of the complex should be compensated for. This raises a lot of difficulties. Because you need to spend more, and then the courts begin. And the company can sue in court more than it invested. Here politics is also layered. It turns out a rather complex tangle that needs to be unraveled somehow. And every year we do not know what awaits us with this tariff. The company says: “We spent so much, we need to raise the tariff,” the deputy explained.

What is an altboiler and why is it needed

There is another type of tariff setting – altboiler. The topic is progressive, but, Natalia Pinus emphasizes, under what conditions all this is being implemented.

Altkotelnaya – an alternative method of tariff indexation. The costs of the program are calculated, for a certain period of time, the upper value of the heat tariff for consumers is set. Marginal price – how much can 1 Gcal of heat cost if consumers built their own boiler house for its production. Investors are guaranteed a return on investment. The “alternative boiler house” method provides for the rejection of state regulation of tariffs for organizations: heat energy producers, grid companies and heat supply organizations. Instead, the final price for heat energy will be set by agreement of the parties, but not higher than the ceiling level set for several years and controlled by the state.

That is, an altitude boiler room is also a method for calculating the heat tariff.

– It may or may not be slightly higher or lower than the current tariff. The tariff for the whole of Novosibirsk may be slightly higher, because we have one of the lowest tariffs in the country. But this allows the heat generating company to plan its costs and invest in modernization, the deputy explained.

In her opinion, such a tariff will make it possible to do without annual “songs with tambourines and courts”, and people will know how much to pay every year. At the same time, the deputy emphasizes, one must first decide whether to switch to an altcotel one or not, and only then adjust all this for concessions.

– If by this time we already have a 10-year concession for municipal property, then our [municipal] property will not be affected by these benefits from the transition to the principle of an alternative boiler house. Who will get all the pies then? What do you think? – she asked a question on her Facebook page.

What do SGK answer

The press service of the SGK company reacted with lightning speed to the deputy’s post, which “saw a catch” in the plans of the mayor’s office and SGK, and responded in its telegram channel.

– The purpose of any concession is to attract an investor who will invest in someone else’s property more than the owner of this property invested on his own. That is why our company will invest 5.5 billion rubles in city property – we confirm this figure. And this is not related to whether Novosibirsk will ever switch to a new model of the heat market or not, the company explained. The SGK also noted that while “work continues on working out the parameters of the concession agreement, conditions are being negotiated in a quiet operating mode”.

– Natalya Ivanovna’s assertion that “as a result, the company [that is, SGK] makes a profit of about 8 billion rubles, in addition to reimbursing all its costs” does not correspond to reality. The concession does not imply this, and it is completely unclear where the presented figures came from, – they were surprised at the Siberian generating company. – How incomprehensible are the allegations that the draft agreement contains overpriced estimates. We declare officially: we did not present any calculations, and we do not understand what the deputy is talking about.

Concession: good or bad

As in the 90s, the city does not have the resources to maintain the heating network on its own, so concession agreements cannot be avoided.

– We are interested in a strategic partner that will serve municipal heating networks. Historically, such a partner for the city for many years has been the SIBEKO company, which is currently part of the SGK, says the quotation of Dmitry Peryazev, head of the Department of Energy, Housing and Utilities of the Novosibirsk Mayor’s Office, circulated throughout the media.

Natalya Pinus emphasized that she is not opposed to the concession, in general, such a tendency can be traced in other regions: if there is a business that is ready to enter and help resolve issues, then it is great, only there should be adequate payment.

As a successful experience of the concession, the Siberian Generating Company cites Rubtsovsk (the population of the city in 2019 is 142 thousand people). The concession agreement was concluded for 15 years, from 2017 to 2032 (during this period, the company’s investments in the heat supply infrastructure should be more than 2 billion rubles).

The company reports on the success of the venture on its website. For example, they carried out technical re-equipment and reconstruction of about 13 km of heating networks, and also built a five-kilometer jumper between the southern and northern heating circuits. This made it possible to establish heat supply to the city from one reliable source after the closure of the CHP, according to the SGK website.

Volgograd can be cited as a negative experience of concessions between the city administration and private companies, where at the end of 2020 LLC Heat Supply Concessions, the utility operator responsible for the supply of heat and hot water, as well as for numerous unburied trenches of heat pipelines, declared a technical default. In an official press release, the company indirectly blamed the population of Volgograd and the coronavirus pandemic for this. The next day, with a similar announcement, “Water supply concessions” were issued – the beginning of 2021 in Volgograd was marked by a series of major accidents in the heat and water supply networks.

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