1. Fuel and Energy Complex of the Pskov Region 1 www.pskov.ru gkt.pskov.ru

2. Основные направления модернизации ТЭК региона Increased reliability of energy supply Increased efficiency of resources management Creation of conditions for implementation of investment projects 2  Increase in energy efficiency (100% provision of metering devices to energy consumers and withdrawal of energy devices with low-class energy efficiency from circulation)  Transition of boiler plants (now working on coal and black oil) to local fuel types (woodchips and peat) Comprehensive programs:  Gasification development  Investment program of JSC IDGC Pskovenergo Main Areas of FEC Modernization in the Region

3. Повышение энергоэффективности 3 Energy efficiency In the housing sector In communal infrastructure systems In public sector In transport sector In the process of energy generation and transmission Program on Increase in Energy Efficiency 1 1 100% provision of metering devices to energy consumers 2 2 Withdrawal of energy devices with low-class energy efficiency from circulation Goals of the program

4. Повышение энергоэффективности 4 Program on Increase in Energy Efficiency Cooperation areas Investment cooperation – concession agreements and energy service contracts 1 1 Facility (communal, transport, social, etc.) Facility (communal, transport, social, etc.) INVESTOR Facility modernization Investment payback due to lower consumption 2 2 Energy conservation equipment supply

5. 5 Modernization of Housing and Utilities Infrastructure – Cooperation Perspectives Technical condition – critical level  ~82% of heat supply networks are worn out  ~50% of heat generating equipment are worn out  Heat loss in the networks comprises ~30%  No measuring equipment  Communal services are highly energy- intensive (expenses on power and fuel comprise ~ 54%) Underestimated investment potential Unused investment potential of local fuels (peat and woodchips). Potential of local fuel market in the north-western region:  In 2008 – 1.0-1.3 bln RUR(25-32,5 mln EUR)  By 2015 – 2.5-2.7 bln RUR (62,5 – 67,5 mln EUR) (including the Pskov region - 0.5 bln RUR (12,5 mln EUR)

6. 6 At present 1,2% of all the boiler plants in the region work on peat and woodchips. 63,3 boiler plants use long-range fuel types as main fuel. 43,8% of them, working on coal and black oil, can be transferred to local fuel types. Use of Local Fuel Types - Potential

7. Модернизация ЖКХ и использование местных видов топлива Transition of boiler plants to peat, chips and firewood Development of equipment production Development of enterprises extracting and processing peat Development of transport and logistics infrastructure 200 boiler plants from 492 Usage of rated wood cutting areas from 25 % to 80% Increase in peat extraction 10 times, at least 50 % - processing Creation of 2 enterprises on production of equipment 7 1 2 Participation in modernization of boiler plants and networks 3 Cooperation areas: Participation in construction of factories on processing of local fuel types Creation of enterprises on production of equipment in the territory of the region Modernization of Housing and Utilities Infrastructure and Usage of Local Fuel Types

8. Ресурсный потенциал региона - торф The region possesses abundant peat resources:  329 deposits with reserves of 563,5 mln ton,  101 deposits with reserves of 100 mln ton are prepared for extraction,  292 deposits with projected reserves of 181,8 mln ton are attractive for exploration 8 Resource Potential of the Region - Peat Average rate per area unit of a forest plot for development of peat deposits comprises 830,7 RUR/ha Layout chart of developed peat deposits for which the right for use of subsoil resources has been granted (specifying the peat extraction enterprise, name of the deposit, volumes, (in 2010 and volumes of extraction in 2009) 1.Deposit : Zayachy Otrog Enterprise: LLC “Bezhanitsy Peat Brick Factory” 2. Deposit: Chisty Mokh Enterprise: LLC “Kontrur” 3. Deposit: Galsky Mokh Enterprise: LLC “Resurs” 4. Deposit: Mamontovsky Mokh Enterprise: LLC “TRF” 5. Deposit: Ostrovskoye Enterprise: LLC “Ostrovsky Gortopsbyt” 6. Deposit: Krasny Mokh Enterprise: LLC “Krasny Mokh” 7. Deposit: Nekhludovskoye Enterprise: LLC “ERT” 8. Deposit: Kachevskoye Enterprise: LLC “ERT 9. Deposit: Zaplusskie Mkhi Enterprise: JSC “Rostorfinvest” 10. Deposit: Yershovskoye Enterprise: LLC “ERT” 11. Deposit: Kripetskoye Enterprise: LLC “Toreks” 12. Deposit: Dolgorepitsy Enterprise: LLC “RusTorf” 13. Deposit: Balastnitsa Enterprise: ME “Pytalovsky Raivodokanal” 14. Deposit: Balastnitsa-2 Enterprise: LLC “ToRRos” 15. Deposit: Grivskoye Zaomsharie Enterprise: LLC “Mineral & Co” 16. Deposit: Agachinskoye-1 Enterprise: LLC “Starkom”

9. 9  coniferous wood - 1,2 mln m 3 per year (of which 768,5 thousand m 3 of commercial timber),  deciduous wood - 2,58 mln m 3 per year (of which 1,3 mln m 3 of commercial timber),  fuel wood - 903,7 thousand m 3,  dead-wood - 387,2 thousand m 3. Existing forest reserves allow to procure up to 3,76 mln m 3 of timber every year: Explored annually:  coniferous wood - 50%,  deciduous wood - 30% of rated wood cutting. Rated wood cutting by districts of the region (thousand cubic meters) From 301 to 500 From 101 to 300 From 25 to 100 Average rate per volume unit of forest resources for procurement of timber under rental contracts comprises 90,8 RUR/m 3 9 Resource Potential of the Region - Wood

10. 10 Implementation of the project on transition of boiler plants to local fuel types will drive development of the regional economy and create a precedent for effective modernization of regional heat supply systems At present2012-20132013-2015 Number, pcs Boiler plants on peat 32848 Boiler plants on woodchips 41423 Boiler plants on firewood 159197295 Heat generating facilities on local fuel types in 2012-2015 Territories of Implementation of the Project Classification of districts by fuel types used at boiler plants

11. 11 In order to modernize the heat and power complex of the region it is planned to attract private capital of investors. The strategic partner in this area is Group of Companies «TETRA-Electric» (jointly with a Danish company «Brix & Kamp» the company implemented the project on modernization of the heat supply system of the region). Along with that, currently agreements of intent have already been signed with such investors as LLC «ESKO», LLC «RosBioprom» (investor – a Swedish company «Euroimp Sales AB»), LLC «ERT», LLC «ROSTORFINVEST», JSC «Energoservice of the North-West», LLC «Corporation «Bioenergy», JSC «Atlas Energo». Attraction of investors for modernization of boiler plants will be based on concession agreement (permanent rent contract) allowing investors to build/modernize boiler plants and operate them during the investment return period. ООО «РосБиоПром» Modernization of the Heat and Power Complex - Partners

12. 12 Group of companies «TETRA Electric» has conducted a comprehensive technological and financial audit of the heat supply system in 3 districts of the region (Velikie Luki, Pushkinskiye Gory and Plussa districts) in 2011 As per tariff in 2011 After modernization th. RUR Use of Local Fuel Types – Cost Reduction of Heat Energy Velikie Luki district As per tariff in 2011 After modernization th. RUR Pushkinskiye Gory district As per tariff in 2011 After modernization th. RUR Plussa district

13. 13  New boiler plants were built and existing boiler plants reconstructed, working on woodchips (4) and peat (3)  Projects on setting up production of wood pellets, woodchips, as well as briquette peat: a factory on production of pellets, a factory on production of peat bricks, factories on production of woodchips. Boiler plant on peat (Kryuki Village, Ostrov district) Boiler plant on peat (Gdov City) Boiler plant on woodchips (Sebezh district: Sebezh City, Berezka Town, Sosnovy Bor Town) Boiler plant on peat (Zaplusye Town, Plussa district) Boiler plant on woodchips (Strugi Krasnye Village) Boiler plants on local fuel types Bioenergy Sector of the Fuel and Energy Complex - Results 2011

14. 14 Схема сотрудничества, предлагаемая инвесторам  Generating power and heat energy from straw and biomass resultant from activity of major pig breeding complexes (LLC «Idavang», LLC «Velikie Luki Pig Breeding Complex»);  Production of liquid biofuel from timber – biobutanol (LLC «Dedovichi Forest Company» (General Satellite) The Administration of the region, jointly with investors, is conducting extensive work on implementation of bioenergy projects in the territory of the region in order to gain additional generating capacities and fuel from biomass : Pig breeding complex for 480 thousand pigs (Nevel district) Pig breeding complex for 100 thousand pigs and grain production for feeds (Ostrov district) Biobutanol factory (Dedovichi Town) Promising Bioenergy Projects

15. THANK YOU! WELCOME TO THE PSKOV REGION! ADMINISTRATION OF THE PSKOV REGION +7 8112 69 97 29 ktitd@obladmin.pskov.ru www.pskov.ru 15