11:23 21.07.2017

Siemens to suspend shipments of generating equipment to state-controlled cos in Russia

2 min read
Siemens to suspend shipments of generating equipment to state-controlled cos in Russia

Siemens, which has accused Russian power plant builder Technopromexport (TPE) of illegally shipping gas turbines that were intended for power plants in Taman to Crimea in contravention of sanctions, will suspend shipments of generating equipment on current contracts with Russian companies controlled by the state, the German engineering giant said in a statement.

Leading Russian generating company Inter RAO is indirectly controlled by the state. The company told Interfax that supplies of Siemens equipment to Inter RAO are currently not needed. The state also indirectly controls another major player on the market, Gazprom Energoholding. The state directly controls RusHydro which owns hydroelectric stations and heat generating facilities in the Far East. Siemens, which supplies equipment to the companies, planned to set up its gas turbines for the Yakutsk GRES-2, but lost the tender to GE.

While equipment supplies are halted to state companies, Siemens will carry out a constant regime of additional control that significantly exceeds legal requirements. This new, permanent mechanism is designed to ensure that potential future deliveries only get dispatched once Siemens has confirmed that the equipment can be installed at the final and contractually-agreed destination. This will include Siemens controlled delivery and installation on the foundation by Siemens personnel. New business engagements in gas turbine power generation equipment in Russia will be solely executed by its majority-owned SGTT joint venture and its wholly-owned subsidiary, OOO Siemens, Moscow. All new engagements would be subject to the new, permanent control mechanism.

Siemens also confirmed its plans to sell its stake in Russian joint venture Interautomatika. Siemens owns a 45.72% stake with the rest belonging to Rostec and IA. Two Siemens employees which represent the company on IA's Supervisory Board will be exchanged or hold their office in abeyance and be dismissed from their responsibilities.

Siemens has also initiated the process of cancelling licensing agreements with Russian companies in the area of shipments of equipment for power plants.

Finally, Siemens is studying potential contracts of its companies with companies around the world regarding possible supplies to Russia, the statement said.

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