MHI to Collaborate with Renova Group and ZAO Ural Turbine Works Of Russia in Gas and Steam Turbine Businesses

Under the agreement, MHI will license its manufacturing technologies for large-size gas and steam turbines to ZAO UTZ. In addition, MHI will establish a joint venture in Russia with ZAO UTZ, a company within the Renova Group, and Teploenergoservice-EK Corporation (TES), a steam turbine maintenance service company, to launch local after-sales service business for gas and steam turbines. MHI and Renova Group also plan to mull the possibility of MHI providing the Group with other of its technologies in the area of power generation: heat recovery steam generators, for example.

Russia has now achieved steady economic growth for eight straight years, partly thanks to rising oil prices. Along with economic expansion, however, the country has been experiencing an escalating shortage of electricity. Constructions of new power plants have been relatively subdued during the past 15 years, but now the country is advancing a large-scale power generation capacity expansion program that calls for the addition of 60,000 MW (megawatts) over a five-year period, including renewal of aged power plants. The collaborative agreement between Renova Group and MHI is targeted at the expanded business projected to come from expansion of Russia's market for power generation facilities.

Renova Group is a stakeholder and strategic investor in a wide range of industries, including metallurgy, oil, machine engineering, mining, chemicals, construction, power generation, housing/utilities and finance. The Group also plans to further strengthen its power generation equipment production business, demand for which is expected to increase greatly. ZAO UTZ, a Group affiliate, is one of Russia's leading steam turbine manufacturers. The company has supplied a large number of steam turbines for heated steam and electricity cogeneration plants ever since the days of the Soviet Union.

Renova Group and ZAO UTZ have been planning to enter into the large-size gas and steam turbine business, while MHI has been looking for a foothold in Russia now that the country has marked outstanding economic recovery. The two companies' respective aims have thus meshed in concluding the new agreement.

The two companies were in discussions toward the collaborative agreement since last year, and the final agreement was reached once Renova Group came to appreciate MHI's technological expertise and comprehensive capability in power generation equipment manufacturing. Centering on this new development, MHI will now aggressively promote its products and services to Russia's expanding power generation equipment market.