TurboChannel: how Siemens got into the story with power plants in Crimea

The first message

In June 2015, the newspaper “Vedomosti” reported that the gas turbine produced by the German company Siemens, can be used in the construction of two power plants in the Crimea. This needs to be done to bypass European sanctions: the export of technology and equipment to the Peninsula was denied the year before, after the recognition by the EU of the fact “occupation” of the Crimea.

According to the publication, to bypass the sanctions were supposed to use the newly opened plant “Siemens gas turbine Technology”, 65% of which is owned by Siemens and 35% of the Russian company “Power machines”. According to the contract made turbine was delivered to the new plant in Taman, so the units first had to go to Krasnodar Krai, and then in the Crimea.

A year later, in August 2016, information about the supply of turbines by Siemens in the Crimea was published by the Agency Reuters. It is reported that construction on the Peninsula of the power plant is designed for the installation of this equipment. Reuters information confirmed by three different sources, and official comments from the Power machines are not followed. In Siemens then referred to the company “Tekhnopromexport” (a subsidiary of Rostec), which was to buy a pre-made turbines and assured the German side that they will definitely not be staged in the Crimea.

The situation got after a year. July 5, 2017, Reuters reported that, despite contractual obligations, gas turbines manufactured by Siemens still sent to the Crimea for the construction of two power plants with a total capacity of 940 MW. RBC sources involved in the project, confirmed this information, saying that the Peninsula delivered two units of the four, and the rest will be brought in for the month.

Sources RBC reported that the installation was made in a joint venture Siemens and “Power machines”, Saint-Petersburg, and then partially reworked in the factories “Rostec”. “The degree of modernization is so great that products can no longer carry the name of the manufacturer, it is a different product,” — said the interlocutor of RBC, close to the project participant. In turn, the representative of Siemens in Munich Wolfram Trost said that the company did not put turbines in the Crimea and complies with all restrictions of export control.

Photo: Peter Kovalev / TASS

The Position Of Russia

The next day, rostec, issued a statement, which said that “Technopromexport” has purchased four sets of gas turbines for power facilities in the Crimea on the secondary market and held them in the modernization of Russian plants and engineering companies.

According to the statement, “Rostec”, the original turbine was planned to buy Iranian company MAPNA. “Ultimately, however, the parties have not reached mutual understanding on a number of technical and commercial issues, and the contract has not been signed”, — stated in the message.

The company was forced to purchase four sets of gas turbine units in the secondary market. “With the aim of bringing it to the conditions and requirements of the project, which originally was laid, was carried out the modernization of these plants by means of specialized Russian factories and engineering companies with modern equipment and qualified specialists”, — explained in “assistance”, without specifying the name of the manufacturer procured the turbines and the seller.

Investigation By Siemens

July 7, the German group said it was to investigate a possible delivery was created a special working group. Any “redirect” in the Crimea bought recently turbines at a company called “pure breach of contract”: “Siemens has repeatedly warned the customer that complies with all export restrictions imposed”.

At Siemens, however, said that they do not possess “convincing evidence” on the supply its turbines to the Crimea. “We are serious about these rumors”, — explained in the company initiation of an investigation. The group is already “working hard” to “find out all the facts.”

Through the day, Reuters reported that one of the companies involved in installation and commissioning of the supplied turbines to the Crimea is the Russian JSC “Interavtomatika”, where Siemens owns a 45.7% stake. Siemens representative said that the German company continues to maintain its position on the involvement in this project. “We are investigating the participation of “Interavtomatika” in starting the gas turbines and any other services and if this is proven, we will take all necessary and available measures in order to stop such activities”, — said in response Siemens, obtained by Reuters via email.

Photo: Maurizio Gambarini / Global Look Press

The reaction of the authorities

For all the time in the Kremlin only twice commented on the situation, and both times it as briefly as possible made by press Secretary of the President Dmitry Peskov. Immediately after the first message he stated that “we do not do turbines in the administration of the President.” A few days later, answering a question of journalists, he said that “Crimea installed turbines produced in Russia, assembled from Russian components”.

On the same day, followed by a statement by the spokesman of the Ministry of Economics of Germany, who said that Siemens is not supplied to the Crimea turbine, because it complies with applicable EU sanctions.

The next day the German Ambassador rüdiger von Fritsch urged Russia to investigate the supply to bypass the sanctions: “If what happened is true, then Siemens has been seriously deceived and it was a breach of contract, a serious erosion of trust and a very strong impact on investments in Russia.”

The Lawsuit Siemens

Four days after beginning its investigation, on July 11, Siemens AG filed a lawsuit in the Moscow Arbitration court to JSC “Technopromexport”, JSC “Technopromexport” and “Siemens gas turbine Technology” due to supply of turbines to the Crimea. The group explained that “Siemens gas turbine Technology” had to be included in the Respondent for technical reasons, as part of the contract for the supply of turbines, essentially all of the claims relate to “Technopromexport”.

Trial for turbine: Siemens is trying to avoid sanctions for the supply of the Crimea

Siemens demands to annul the deal on the supply of “Technopromexport” four gas turbines, or refund the full price of the shipped equipment, said Forbes, citing the statement of claim of the company. The cost of one turbine was €27,95 million, that is, the total amount of the contract is €111,8 million Siemens also asked the court to arrest the turbine and to prevent the actual owner of their mount. The claim was registered by the court and upheld until August 21.

The German company said that “Technopromexport” the plan was to enter a vendor in error and an explanation about the supply in Taman was a cover. “We need to think about what this situation means for our relations with Russia”, — said the source to Reuters the German concern.

Photo: Tobias Schwarz / Reuters

Siemens in Russia

Besides the production of turbines in Russia the German company engaged in the production of freight electric locomotives “Sinara”, “Granite” and of electric trains Desiro (“Swallow”). The train let out “Ural locomotives” — a joint venture Siemens and groups “Sinara” Dmitry Pumpyansky. Until December 1, 2017 “Ural locomotives” can sign a contract with the Federal passenger company for the supply of 90 train cars “Swallow”, said the Deputy General Director of “Sinara — Transport machines” Anton Zubikhin. Siemens also supplies to the Railways of the train “Sapsan”, which are produced in Germany.

Siemens has a plant in Voronezh “Siemens Transformers”, which produces equipment for power substations. Another plant in Smolensk, produces fluorescent lamps. In 2016 “Siemens Health care” signed a partnership agreement with the National immunobiological company “Rostec” aimed at creating a centralized laboratory and diagnostic centers based on technological solutions from Siemens, but statements about the beginning of works on the project have not yet been. Finally, Siemens delivers to Russia the means of communication and lighting equipment.

The Resignation Filippova

On the evening of 13 July it became known about detention in St. Petersburg General Director of “Power machines” Roman Filippov, who is suspected of divulging state secrets. The FSB gave no comment on this subject, but the source of RBC, close to the “Power machines”, said that the detention was not connected with the case of turbines.

Later it turned out that Filippov was really questioned by the FSB, but, according to “Interfax”, no procedural status had not been received, so the next day continued the work. However, on 19 July, the Board of Directors of “Power machines” ahead of schedule stopped powers, and the reason of such decision the company was not called.

Failure Siemens of state

On the morning of July 21, Siemens issued a statement that he had received “reliable information” that all four gas turbines, delivered in the summer of 2016 in Krasnodar Krai, was “locally modified and illegally moved” to Crimea in violation of the Treaty. “This action represents a grave violation of supply contracts to Siemens, had undermined the trust and violated the rules of the European Union”, — stated in the message of the company.

A gift to the hawks: what threatens Russia scandal with Siemens turbines

In this regard, the group initiated the process of breaking license agreements with Russian companies to supply equipment for power plants and temporarily suspended deliveries to Russia, including for government contracts. Siemens also announced the exit from among shareholders “Interavtomatika”, which was one of the contractors involved in the installation of turbines.

According to the statement of the concern in further cooperation with Russian companies, Siemens plans to implement additional control mode to control the supply and installation of the turbines “at the agreed place”. The relevant contracts will be written the paragraph about the delivery and installation of equipment employees, as well as a clause providing for the execution of such works only by companies the majority share of which belongs to German concern or its Russian “daughter”.

The first major Russian company to respond to the statement by Siemens, has become “inter RAO UES”, which stated that at the present time does not need to supply gas turbines of Siemens, because all the necessary equipment is already delivered on its construction sites. Official comments from the Kremlin and from representatives of Rostec and “Power machines” is not followed.