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IDGC of Centre will dispute the decision of the Arbitration Court of Moscow

11 October 2012

The decision of the Arbitration Court of Moscow to settle the claim of OJSC “Novolipetsk Metallurgical Combine” (NLMK) to recover from IDGC of Centre 5,1 billion rubles is considered by the energy company unreasonable. IDGC of Centre intends to challenge the decision of the court in the fixed by the legislation period.

IDGC of Centre is convinced of the rightness of its position and considers the NLMK claims unfounded, since all payments by NLMK were made according to the current, no one disputed contract for the provision of services, and therefore are not unjust enrichment. In addition, IDGC of Centre emphasized that the amount in dispute, despite the decision of the Arbitration Court of Moscow, has not been proved, and the facilities with which electricity was transmitted, in the disputed period were leased by it.

In the opinion of IDGC of Centre, the substance of the case is as follows.

OJSC “Lipetskenergo” (now IDGC of Centre — Lipetskenergo division) and NLMK on 21.06.2005 signed agreement providing electricity transmission services # 468/15. Under the agreement Lipetskenergo undertook to provide electricity transmission services, and NLMK was to pay for the electricity transmission services. In accordance with paragraph 2 of the Rules of non-discriminatory access to transmission services, approved by the Government of the Russian Federation of 27.12.2004 # 861, transmission services are provided by organizations that own legally transmission facilities. In this context Lipetskenergo on 01.09.2005 entered into agreement to use transmission facilities #DI-39 with OJSC “ITC Centre” (now a part FGC UES). Under the agreement transmission facilities were transferred to Lipetskenergo for lease that during the reform of the Russian power system were transferred from OJSC “Lipetskenergo” to OJSC “ITC Centre”, including the 220 kV “Metallurgical”, 220 kV “Severnaya” , and 220 kV “New”. In addition, on 26.10.2011 transmission facilities lease agreement was concluded # ESKH-2011/25 with the condition to cover the relations of the parties effective prior to its conclusion, starting from 01.07.2008, i.e. from the date of termination of RAO “UES of Russia”.

Thus, IDGC of Centre — Lipetskenergo division provides electricity transmission services for consumers of the Lipetsk region using transmission facilities owned by the right of ownership or other legal basis. Starting from the date of the electricity transmission services agreement conclusion with NLMK in 2005, and to date, IDGC of Centre — Lipetskenergo division has been qualitatively performing all obligations under the agreement, as evidenced by the absence of complaints from NLMK about the quality of services, reliability of power supply and signed certificates of services rendered by both parties for the entire duration of the contractual relationship.

It is important to note that the revenue from the sale of electricity transmission services of NLMK was used by the Administration of the Lipetsk region to curb the growth of rate for electricity in the region (43% without NLMK), including for residential customers, in the region new power facilities were being constructed and commissioned, and those already in operation were being reconstructed. This allowed the Regional Administration to implement social programs, increase the reliability of power supply in the region, to develop small and medium-sized businesses and make the Lipetsk region attractive to investors. Given the above, it can be concluded that IDGC of Centre — Lipetskenergo division had no unjust enrichment.

It should also be emphasized that the Ministry of Energy of the Russian Federation and the Administration of the Lipetsk region fully supported the position of IDGC of Centre, including during the trial.

With specific regard to the court in session, it should be noted that the judge of the Arbitration Court of Moscow today in making the decision did not take into account the case law that had developed in the same Arbitration Court. So, September 5, 2012 the court handed down the very opposite decision for similar dispute # A40-21082/12 in which LLC “Rusenergosbyt” was denied satisfaction to recover from IDGC of Centre unjust enrichment with the “last mile” facilities.

And today the Moscow Arbitration Court for similar case # A40-21130/2012 also rejected suit of LLC “Rusenergosbyt” to recover from IDGC of Centre unjust enrichment with the “last mile” facilities. August 21, 2012 the Arbitration Court of the Voronezh region in case # A14-10848/2012 also rejected suit of LLC “Rusenergosbyt” to IDGC of Centre. That’s why IDGC of Centre does not feel able to accept the decision of the Arbitration Court of Moscow and will challenge it.

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