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Gazprom, coal firm agree conditions on creating joint venture

Gazprom, coal firm agree conditions on creating joint venture

Russian gas behemoth OAO Gazprom and the country's biggest coal producer, Siberian Coal Energy Company, said Tuesday they have agreed to merge their electricity and coal assets in a deal that will also give Gazprom a majority stake in the coal company.
Under the deal, Siberian Coal will emit additional shares to be purchased with electricity assets owned by Gazprom subsidiaries. Gazprom will thereby gain a stake of 50 percent plus one share in the coal giant, the companies said in a joint statement.
The merger, between assets of the world's largest gas company and the provider of almost one-third of the coal used by Russia's power plants, has been a subject of concern with antimonopoly authorities. Former Economics Minister German Gref last year also spoke out against the proposal, saying it could be harmful for competition.
The companies said they will apply for official authorization in the near future and expect to complete the asset merger by Aug. 31.
Energy resources have come under increasingly centralized state control during President Vladimir Putin's tenure, and the merger would further consolidate that trend.
Gazprom has frequently expressed its ambition to expand its interests in the power sector as part of a bid to become a global-level vertically integrated energy company.
The proposed venture will have 11 board members, with five representatives from Gazprom, four from Siberian Coal and a two independent members, the statement said.
Deloitte last year evaluated Siberian Coal's coal and electricity assets at between US$6 billion (euro4 billion) and US$8 billion (euro5.4 billion).