OREANDA-NEWS. On May 03 2007 OAO "TGC-2" received from the Yaroslavl City Inspectorate of the Russian Federal Tax Service a certificate evidencing the termination of activity of OAO "Arkhangelsk Generation Company" after it had merged with and into OAO "TGC-2". Thus, all regional generation companies which belong to the TGC-2 configuration have completed their merger with and into OAO "TGC-2" and become its subsidiaries, reported the press-centre of  RAO "UES of Russia".

On 3 May 2006, the shares of OAO "Arkhangelsk Generation Company" were converted into TGC-2 shares, and its shareholders became shareholders in OAO "TGC-2". After the report on the new TGC-2 share issue is registered with the FSFM of Russia, RAO "UES of Russia" will hold a 49,36 percent stake in OAO "TGC-2".

In July 2006, TGC-2 completed the first phase of its establishment, which involved the merger of OAO "Vologodskaya CHPP", OAO "Kostroma Generation Company", OAO "Novgorod Generation Company", OAO "Tver Generation Company", and OAO "Yaroslavl Energy Company" with TGC-2.

The final structure of TGC-2 also provided for the merger of OAO "Arkhangelsk Generation Company" with TGC-2. However, the merger of Arkhangelsk Generation Company with TGC-2 was suspended due to the regional generation company's unfavourable financial situation caused by the fuel oil price hike and the difference between the actual fuel prices and the prices envisaged by the power rates.

In order to rectify the situation, the Management Boards of RAO "UES of Russia" and TGC-2 took a number of measures which helped significantly reduce and stabilize the fuel price for the power plants controlled by OAO "Arkhangelsk Generation Company", and bring the cost of electricity generated by them into line with the average wholesale price of electricity and ensure the company's stable long-term position on the electricity market.

Thus, the financial position of Arkhangelsk Generation Company has improved, which made it possible to merge it with OAO "TGC-2" and achieve the final corporate structure of TGC-2.

The creation of a unified operating company will help expand the scope of TGC-2 operations, improve its financial strength, secure a higher credit rating and reduce the cost of debt service.