FINAL REPORT

MDR 1750
July 04, 2022

Insured PJSC OGC-2

Loss Reference DAMAGE TO MAIN EQUIPMENT OF POWER UNIT NO.4 AT

CHEREPOVETSKAYA GRES
Date of Loss JANUARY 12, 2021
PROPERTY INSURANCE POLICY NO. 21 РТ 0015 DATED
Policy Details
DECEMBER 24, 2020
Our Reference MDR1750
Synopsis

Insurable Interest Relevant Policy Cover & Limits

Confirmed Limit of liability per occurrence:

RUB 6 000 000 000 (six billion)

Damage Cause

Damage to steam turbine, gas turbine Erroneous actions by staff while performing
and generator incorrect switching operations, leading to loss of
control of main equipment of power unit No.4

Remedial Action & Repairs Subrogation

Partial replacement and repair of main Given identified causes of incident, we believe,
equipment Insurers do not have opportunity for subrogation

Applicable Deductible(s) Recommended Reserve & Payments

Policy deductible of RUB 10 000 000 Recommended full and final settlement of
(ten million) roubles RUB 1 759 704 983,07, net

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Table of Contents
EXECUTIVE SUMMARY ____________________________________ 4
BACKGROUND ___________________________________________ 5
CIRCUMSTANCES _________________________________________ 6
INVESTIGATION AND CAUSE _______________________________ 7
DAMAGE ________________________________________________ 9
COSTS _________________________________________________ 12
POLICY DETAILS _________________________________________ 13
FINAL ADJUSTMENT _____________________________________ 15
FINAL SETTLEMENT ______________________________________ 18
SUBROGATION __________________________________________ 18

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EXECUTIVE SUMMARY
We refer to our Preliminary Report to Underwriters, dated April 05, 2021, in which we provided
initial information about damage to the main equipment of power unit No.4 at Cherepovetskaya
GRES on January 12, 2021 and the causes thereof.

Following our review of the provided documents and information concerning the circumstances
of the incident, we are satisfied that the incident resulted from erroneous and negligent actions
by the staff while performing switching operations in the switchboard, which resulted in de-
energizing of power unit No.4 and loss of control of the power unit’s equipment (including lube
oil pumps) and subsequent damage to the insured property of power unit No.4.

Since we last reported, the Insured have provided documents required for our adjustment of
the claim, including documents in support of actual reinstatement costs for the damaged
property in the amount of RUB 1 852 567 111,06 (net of VAT).

The fact that the works were performed is supported by work completion certificates (including
KS-2 and KS-3 forms) and the power unit’s equipment was provided with protective enclosures
after repairs which limited access for inspection, therefore, we did not go on a visit to inspect
the repaired facility in order to optimize adjustment costs. The fact that the power unit was
repaired and returned to service as normal has been independently checked with the System
Operator.

Following our review and adjustment of reinstatement costs, we estimate the Insured’s loss at
RUB 1 769 704 983,07. In view of the above, we are able to recommend the amount of
RUB 1 759 704 983,07, net of the deductible (RUB 10 000 000) in full and final settlement to
the claim.

We, therefore, complete our adjustment of this claim. Should Underwriters agree to our
recommendations, we believe, the file in respect of this claim may be closed following the
indemnity payment.

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BACKGROUND
The Second Generating Company of the Wholesale Electricity Market (PJSC OGC-2) is a
Russian power producer which was established following reforms in RAO EES of Russia. The
company’s core activity is the production and supply of electricity and heat. The key sales
market is the Wholesale Electricity (Capacity) Market.

OGC-2 manages 9 combined heat and power plants and 2 thermal power plants with a total
installed capacity of 17,163 GW.

Cherepovetskaya
GRES

Figure 1. Location of the power plants of PJSC OGC-2

Cherepovetskaya GRES is the largest power plant in Vologda region, in the construction
camp of Kaluy, 50 km west of the city of Cherepovets. The installed capacity to the power
plant is 450MW. The company is a branch of PJSC OGC-2.

When power unit No.4 was commissioned in November 2014, it had a capacity of 420
megawatt (PGU-420). In 2017-2018, the power unit was modernized and its installed capacity
increased to 450MW. The main type of fuel is natural gas and standby fuel is diesel fuel.

PGU-420 is a single shaft unit comprising a 300MW gas turbine, a 150MW steam turbine and
a generator set:
gas turbine unit SGT5-4000F manufactured by Siemens in 2014;
steam turbine SST5-3000 manufactured by Siemens in 2014;
turbine generator SGEN5-2000H manufactured by Siemens in 2014.

From the Insured’s notice of loss, on January 12, 2021 there was a drop of voltage resulting
in a trip of the lube oil pumps of power unit No.4 (PGU-420) which led to damage to the gas
turbine, steam turbine and condenser and the generator set, which is the subject of this claim.

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CIRCUMSTANCES

We have been provided with the Report of Investigation into the causes of the incident on
12.01.2021 (hereinafter – the Report of Investigation), No.1, which states that the load of
power unit No.4 was 427,5 MW.

According to the Report of Investigation, the incident scenario was as follows:

“On 12.01.2021 at 0720 hours a warning of voltage drop to 209V was displayed at the main
switchboard of the automatic control system.
...
On 12.01.2021 at 1038 hours, relay protection and control specialists of the power plant
performed an inspection as prescribed by the manufacturing plant and established that the
control boards A-1 of overvoltage protectors 1 and 2 were out of order and the direct current
board of the power control center was only powered by the battery

To prevent the equipment from tripping on voltage drop in the direct current board of the power
control center of power unit No.4 (PGU-420), electrical shop supervisor and deputy chief
engineer made a decision to temporarily energize the direct current board of the power control
center from one of the overvoltage protectors of direct current board-3 (plantwide) by means
of a power cable circa 30m in length, with some changes made to the normal circuit of the
direct current board of the power control center to ensure work safety, namely, the manually
operated breaker “Power Input from Overvoltage Protector No.1 40BLT10” was switched off.
...
Electrical shop supervisor Silin A.A. made sure that the temporary circuit was correct and gave
a permission to apply voltage to the direct current board of the power control center. At 1412
hours the direct current board of the power control center was under ≈210 V. Supervisor Silin
A.A. who was in the direct current board room reported to deputy chief engineer Simeruk V.V.
that repairs had been successfully completed and instructed to stop all switching operations.

At 1413 hours, electrical shop shift supervisor Kuzmarov S.A. mistakenly instructed senior
electrician Gromov Yu.A. to switch off the manual breaker “Power Input from Overvoltage
Protectior No.2 40BLT20”, senior electrician Gromov Yu.A. did as instructed, which caused
the only remaining power input of the direct current board of the power control center to switch
off.

This led to a loss of control of the GTU equipment and direct current devices, process
protection systems and mechanisms were switched off. The power unit’s generator was
switched to a driving mode with a peak consumption of 70MW.

At 1415 hours, power supply to the direct current board of the power control center was
resumed after the manual breaker was switched on, “Power Input from Overvoltage Protector
No.2 40BLT20”.
At 1415 hours, generator circuit breaker switched off, emergency oil pumps of the turbines
were switched on.

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At 1415 hours, generator hydrogen discharge button was pressed on control board-2 of the
turbine and boiler shop, booster compressors 1,2 and 3 stopped. Ventilation cooling towers
VG -1А, 2А, 2В, PEN-VD-4B were stopped.

At 1420 hours, electrical shop personnel switched the generator to argon.

At 1509 hours, 24V power was supplied the automatic control system equipment which started
loading. At 1511 hours, the automatic control equipment was loaded and resumed normal
operation”.

INVESTIGATION AND CAUSE

To investigate the causes and circumstances of the incident, the Insured issued Order No.3
dated January 12, 2021 to set up an investigation commission, including:

Chairman: Director of Cherepovetskaya GRES.

Deputy chairman:
deputy chief engineer for operation;
deputy chief engineer for repairs.
Members:
HSE supervisor;
boiler and turbine shop-2 supervisor;
thermal instrumentation and control shop superviso;
electrical shop supervisor;
shop supervisor;
shop supervisor head of financial and economic department ФЭУ;
lead engineer HSE;
senior inspector for operation of power plants (secretary);
HSE director of PJSC OGC-2;
combined cycle unit supervisor of PJSC OGC-2;
chief HSE expert of PJSC OGC-2.

On January 21, 2021, Orders 31 and 39 were issued to appoint additional members to the
investigation commission:
deputy director for corporate protection;
deputy chief engineer, head of technical services department of PJSC OGC-2;
director of engineering center LLC Gas Turbine Service (as may be agreed);
representative from JSC SOGAZ.

The commission completed their investigations on January 29, 2021 and issued the Report of
Investigation:

Organizational Causes:
“Power unit No.4 (PGU-420) tripped due to the open position of the automatic natural gas and
diesel fuel shutoff valves as a result of the voltage drop on the direct current board of the power
control center.

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The voltage drop resulted from incorrect switching of the breaker “Power Input from
Overvoltage Protector-2 40BLT20” by electrical shop personnel.

Electrical shop shift supervisor himself took a decision to switch off the breaker “Power Input
from Overvoltage Protector-2 40BLT20” and erroneously instructed his subordinates to
perform the switching.

Following the shift supervisor’s instruction, senior electrician of the electrical shop switched off
the breaker “Power Input from Overvoltage Protector-2 40BLT20”, causing power unit No.4
(PGU-420) to trip.

The complex switching operations were performed without a switchover program, switchover
sheet.
Switching of the electric units was performed without a work permit.

Changes to the design arrangement of the direct current board of the power control center
were made without a written order from the power plant’s technical director and without consent
of the design organization and manufacturing plant”.

Technical Causes :
“Switching off the breaker “Power Input from Overvoltage Protector-2 40BLT20” resulted in a
loss of power supply from direct current board-3 to direct current board of the power control
center and subsequent trip of power unit No.4 (PGU-420) and loss of control of the gas turbine
and steam turbine equipment”.

Therefore, based on the Report of Investigation, the incident scenario appears to be as follows:

On January 12, 2021 at 1038 hours, the power plant personnel discovered that the
control boards A-1 of the overvoltage protection devices UZP-1 and UZP-2 were out of
order and the direct current board of the power control center was powered not by the
internal power network but by a battery;

To prevent the equipment of power unit No.4 from tripping on voltage drop, the staff
made a decision to temporarily energize the direct current board of the power control
center from a standby power source by means of a power cable;

At 1412 hours the necessary operations had been successfully completed;

At 1413 hours the direct current board of the power control center was de-energized
as a result of a wrong switching command;

Control of the equipment of power unit No.4 was lost, including lube oil pumps that
were switched off, causing damage to the main equipment.

The investigation revealed failure of the control board. As a result of the incident, the direct
current board of the power control center was de-energized and appeared to be powered by a
battery and not from the internal power network. While power was supplied to the direct current

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board of the power control center from the battery, the staff were able to prevent damage to
the equipment by performing any of the following:
Emergency shutdown of power unit No.4 and subsequent repair/replacement of control
boards;
Connect the direct current board of the power control center to the power network after
finalizing a switchover program approved by the system operator’s dispatchers.

Following our review of the provided documents and information concerning the circumstances
of the incident, we are satisfied that the incident resulted from erroneous and negligent actions
by the staff while performing switching operations, which caused tripping of power unit No.4
and loss of control of power unit’s equipment (including lube oil pumps), leading to subsequent
damage to the insured property of power unit No.4.

DAMAGE
The subject incident resulted in damage to the main equipment of the power generating unit
and based on the provided inspection reports the main defects of the equipment are as
described below:

Datasheet 0-1

Damaged equipment,
## Extent of damage
component, part
1. Steam turbine SST5-3000
1.1 Bearing shell No.5 Damage to babbit of bearing faces
1.2 Bearing shell No.7 Damage to babbit of bearing faces and stop faces
1.3 Oil rings of bearing No.7 Damage to brass seals, out-of-roundness
Bearing No. 8 Damage to babbit of bearing faces, damage to brass
1.4
seals of the oil ring
Flow path of high pressure Wear of sealing elements;
1.5 cylinder Deposits of foreign material on the inner surface of the
shroud of the last stage of the high pressure cylinder
Flow path of medium pressure Deposits of foreign material on the blades, shroud and
1.6
cylinder stage 16 rotor
Flow path of low pressure Damage to sealing elements of the rotor
1.7
cylinder
SSS Clutch (steam turbine – Oil deposits, corrosion, debris, babbit;
1.8 generator) Wear and sticking of babbit;
Wear of the ratchet gear
Medium pressure rotor: Radial rubbing of all stages, wear
and loss of sealing elements;
Medium pressure rotor and low
1.9 Low pressure rotor: wear of sealing elements of stage 1,
pressure rotor
wear of seals of stage 5, wear of the surfaces and sealing
elements, scratches, pieces of babbit
Guide vane assembly of Scratches on the shroud surfaces;
1.10 medium/low pressure stages Radial rubbing;
Damage to guide vanes and sealing elements
1.11 End steam seal Radial rubbing, overheating, deformation

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 Damaged equipment,
## Extent of damage
component, part
Rotor turning gear of steam Damage to the half-coupling, middle shaft
1.12
turbine
Rotor turning gear of steam Damage to the half-coupling, middle shaft
1.13
turbine
2. Gas turbine SGT5-4000F
Compressor flow path in the Radial rubbing in the 6 o’clock zone
2.1 area of the blades of stages 1
and 2 of the compressor
Flow path in the area of the Sagging of the rotor, radial rubbing
2.2
blades of stage 1 of the turbine
Oil ring of rotor turning gear Damage, total wear of the lower half of the shaft seals,
2.3
change in sizes
2.4 Bearing shell No.1 Damage to babbit on bearing faces
Middle shaft gas turbine- Scratches on the radial surface of the flange
2.5
generator
2.6 Instrumentation Damage to sensors and instruments
Wear of the front hollow shaft and rotor journal;
Cold deformation of the front hollow shaft in the area of the
oil stop ring;
Traces of brass seals in the area of the front hollow shaft;
Rubbing marks and discoloration of metal on the end
surfaces of the rotor discs;
Rotor of gas turbine Wear of discs of stages 1, 2, 4-9 of the compressor;
2.7
Wear of discs of stages 3, 10, 12 and 15 of the compressor;
Wear of the radial surface of the aft hollow shaft and babbit
deposit;
Lowering of the sealing lip on the torque transfer discs No.1
and 3;
Wear of the stator cooling air pipe in the area of contact
with the hub in the radial direction
Oil supply lines and oil vapor Dents
2.8 discharge lines of 2 bearings
of GTU
Turbine blading Rubbing of the blades of stage 3 of the turbine
2.9
Wear of the edges of the blades of stage 4
Axial support ring of bearing 1 Wear in the axial direction in the area of contact with
2.10
bearing pads, metal buildup
Diaphragms of gas turbine Signs of axial rubbing and discoloration of material on the
compressor internal rings of stages 1-3, 6-9, 11, 14;
2.11
Radial rubbing and wear of sealing lips on segments 1.4,
2.3, 2.4, 3.3, 3.4, 5.4
2.12 Air seals of the aft hollow shaft Wear and separation of sealing lips at 6 o’clock
Bearing of the compressor Extensive wear and loss of babbit on the pads;
2.13 (No. 2) Scratch on pad No. 7;
Wear and loss of material
Guide vane assembly of the Signs of radial rubbing
2.14
compressor

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 Damaged equipment,
## Extent of damage
component, part
Guide vane assembly of the Signs of radial rubbing and loss of material and cracks on
2.15 turbine the casing, stage 3, stage 4, guide ring downstream of
stage 4
Blades of stages 1 and 2 of the Wear of blade edges;
2.16
turbine Signs of axial rubbing
2.17 Shaft turning gear Damage to the thread
Compressor diaphragms Damage to the slots and sealing plates;
Loosening of blades on the internal ring;
2.18
Loss of the coating in the area of the leading edge on all
inlet guide vanes
Diaphragm of the inlet guide Radial rubbing marks and lowering of sealing lips
2.19
vane assembly
2.20 Compressor blades Rubbing marks and loss of material of the blades
2.21 Instrumentation Damage to the sensors and instruments
3. Generator SGen5-2000H
Upper and lower shells of Damage to babbit surfaces, scratches and grooves
3.1
bearings Nos.3 and 4
Oil ring of bearings No.3 and 4 Complete destruction of labyrinth seals, radial wear of
3.2
metal of the casing, deformation of the internal diameter
Hydrogen seals in the area of Wear and destruction of graphite plates, radial wear,
3.3
bearings No.3 and 4 rubbing and deformation of base metal
Oil trap of bearings No.3 and Crumpling and destruction of sealing elements
3.4
No.4
Diffusors Wear of the surface in the area of 4-8 o’clock on either
3.5
side
3.6 Cooling blades Deformation
Brushgear stator Delamination of the insulation, damage to the cables,
3.7
contact surface and coating, all brush holders
3.8 Brushgear casing Damage
Rotor Damage to the insulation bushing under the slip ring;
3.9 Radial rubbing on the shaft surface;
Wear, scratches, surface cracks on the journal
Middle shaft of slip rings Axial displacement of the fan;
3.10
Radial rubbing marks
High voltage leads Abrasive dust deposits on the contact surface;
3.11
Cracks on the lower part of the insulation bushing
3.12 Noise protection Deformation of the posts, beams, panels and plates
3.13 Instrumentation Damage to sensors and instruments

In addition to the equipment, the main building in which the equipment was located was also
damaged:
double pane glass (3 units) – broken deformed;
metal casing of the ventilation system - deformed.

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COSTS
The Insured’s original claim did not exceed RUB 1 billion, however, following a survey of
defects performed by Siemens, property reinstatement costs were revised. The Insured have
presented their claim for reinstatement costs in the amount of RUB 1 852 567 111,06 (net of
VAT), as follows:

Datasheet 0-2

## Cost item Amount, RUB

1. Contract No.PO-ChG/05-2021 dated 24.05.2021 with LLC STGT
1.1 Supply of front hollow shaft of the gas turbine 41 924 211,99
1.2 Supply of aft hollow shaft of the gas turbine 25 202 279,56
1.3 Supply of rotor ties for the gas turbine 17 389 370,38
1.4 Supply of rotor clamp nut 2 401 351,16
Supply of compressor blades No.1, 2, 3, 4, 7, 8, 9, 10, 12, 15 for the
1.5 120 912 089,44
gas turbine
Supply of compressor rotor discs stage No. 3 and 4 for the gas
1.6. 41 519 717,70
turbine
1.7 Supply of the rotor for the generator 299 864 685,00
1.8 Supply of thrust bearing for the gas turbine compressor 38 765 115,80
Supply of supports for the medium and low pressure cylinder of the
1.9 4 509 233,00
steam turbine
1.10 Supply of the frame for the generator’s rotor 6 960 020,00
1.11 Supply of pedestals for the gas turbine and generator 4 295 384,00
1.12 Supply of casings for carbon seal rings of the generator 67 676 498,43
1.13 Supply of spares for the gas turbine, steam turbine and generator 116 935 350,25
1.14 Supply of bearings for the generator 15 079 595,83
Dismantling and survey of defects of the gas turbine, steam turbine
1.15 71 499 730,66
and generator
1.16 Cutting of steam turbine flange at St.Petersburg port 1 905 077,00
1.17 Additional strip-down/assembly of the gas turbine rotor 12 100 000,00
Calibration of mechanical details and vibration control systems for the
1.18 2 095 852,50
gas turbine, steam turbine and generator
1.19 Repair of the gas turbine, steam turbine and generator 274 325 367,19
2. Contract No. US-ChG/05-2021 dated 31.05.2021 with LLC STGT
2.1 Installation supervision and adjustment of the steam turbine 34 683 711,00
3. Contract No.DP-ChG/05-2021 dated 13.05.2021 with JSC TEK Mosenergo
3.1 Installation of steam turbine equipment, pre-commissioning and trials 106 507 187,72
4. Contract No. 22-12/21-239 dated 21.06.2021 with LLC INGRA
4.1 Repair of the upper part of the foundation of the turbine 298 913,53
5. Contract No. 22-12/21-286 dated 30.08.2021 with LLC Rosinter
5.1 Repair of the ventilation and glass panels of the turbine house 346 454,92
6. Contract No. 22-12/17-119 dated 29.12.2016 with LLC TER-Service
6.1 Survey of defects of the gas turbine, steam turbine and generator 10 156 736,48
7. Agreement on transfer of pledged property dated 08.04.2021 with JSC Group E4
7.1 Supply of spares for the steam turbine 301 119 974,51
8. Contract No. 22-12/21-202 dated 09.04.2021 with LLC Stone-Logistics
8.1 Transportation services 193 005 946,24
9. Customs charges 43 583 656,30

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 ## Cost item Amount, RUB
10. Return materials (salvage) (2 496 399,53)
Total: 1 852 567 111,06

The above amounts are supported by contracts, certificates, invoices, payment orders, etc.
Results of our adjustment of the Insured’s costs are provided in the dedicated section of the
report.

POLICY DETAILS
We have been provided with the Property Insurance Policy, No. 21 РТ 0015 dated December
24, 2020 which contains the following provisions that may be relevant to the claim:

The policy period is: “00 hours 00 minutes on «01» January 2021 ... to 24 hours 00 minutes
on «31» December 2021”.

Insured Property:
“1.3.1. All real property (including all parts thereof – structural elements, engineering
equipment…, ... interior and exterior finishes, windows, etc.)...

1.3.2. All machinery and equipment, mechanisms, apparatuses, installations, transfer devices,
electrical equipment, wiring, steam boilers, steam turbines, steam ducts…, comprising the
property/production complexes…
...
This Policy insures property in operation, maintenance and repair of any kind, in conservation,
on standby, in storage”.

Insured Loss:
“2.1.1. Loss of or damage to ... insured property ..., resulting from any risk not excluded from
the “All Risks” cover”.

Exclusions in respect of paragraph 2.1.1.:

“а) Intent of the Insured or their manager (authorized representative), another agency of the
legal entity (executive board, central office) and parties acting on their own behalf but the
knowledge of and in the interests of the Insured.

Willful acts committed by the Insured or Beneficiary are acts committed by representatives (or
employees) of the Insured or Beneficiary if the representative (employee) realized the dangers
of their acts (omission) as per the current regulations, were able to foresee that adverse
outcomes were possible or inevitable or desired them to ensue;
...
к) Intentional failure on the part of the Insured or parties operating the insured property on the
Insured’s instruction and responsible for the condition of the property to take prescribed
measures to keep the property in good order and operable. Unintentional (involuntary) failure
on the part of the Insured or parties operating the insured property on the Insured’s instruction
and responsible for the condition of the property to follow operating instructions and

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procedures for the insured property shall not be a reason for rejection of the Insured’s claim in
full or in part;
...
2.1.4.1. The list of policy exclusions shall not be extended and broadly interpreted”.

Paragraph 2.1.2. provides Machinery Breakdown coverage “All Risks, including (without
limitation) the following causes (risks):
Defects of manufacture and/or use of material;
Defect in design, construction, calculation;
…
Unintentional mistakes by the staff of the Insured in the course of operation and
maintenance of the machinery and equipment;
...
impact of current in the form of a short circuit, grid overload, overvoltage and
undervoltage, induced current, circuit breaking, arcing, atmospheric discharge and
suchlike including damage resulting from ensuing fire;
failure or fault of protection devices;
…
unforeseen and fortuitous malfunctioning such as … maladjustment…
…

The Machinery Breakdown insurance also covers breakdown or failure of attachments,

protective and regulating devices as well as breakdown involving deviations from normal
operation modes (parameters) of machines and process equipment where tolerances
prescribed for these machines and process equipment are exceeded thus rendering further
operation impossible as a result of risks listed in this paragraph.

2.1.4.2. In respect of paragraph 2.1.2, the insurance does not cover losses resulting from:
а) Intent of the Insured represented by their manager (authorized representative), another
agency of the legal entity (executive board, central office) and parties acting on their own behalf
but with the knowledge and in the interests of the Insured.

Willful acts committed by the Insured or Beneficiary are acts committed by a representative
(or employee) of the Insured or Beneficiary if the representative (employee) realized the
dangers of their acts (omission) as per the current regulations, were able to foresee that
adverse outcomes were possible or inevitable or desired them to ensue;

з) Constant exposure to operational factors (corrosion, erosion, scale, cavitation, rust, etc.)
except when constant exposure to operational factors of some parts of the insured property
caused loss of or damage to other parts thereof or other insured property. The indemnity in
this case shall not include the cost of the parts subjected to such exposure leading to loss of
or damage to other parts of the insured property or other insured property;

и) Cutoffs of gas, water, electricity not resulting from failures of the power grid, water and gas
supply systems;
…
2.1.4.4. The list of policy exclusions shall not be extended and broadly interpreted”.

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The sum insured is stated in Appendix No.5 to the Policy as RUB 22 076 659 005 net of VAT
in respect of the property (production complex) of Cherepovetskaya GRES.

The limit of liability per occurrence is RUB 6 000 000 000.

The policy deductible is RUB 10 000 000.

FINAL ADJUSTMENT
As mentioned above in the Costs section, the Insured have presented their claim for
reinstatement costs in the amount of RUB 1 852 567 111,06.

In the course of our adjustment, we reviewed these costs based on the policy terms and
conditions to check, in particular, whether claimed costs are consistent with the sums insured
that are based on the actual market value (net of VAT) and initial book (replacement) value (as
per accounting records).

As mentioned earlier, Appendix No.5 to the Policy sets a general sum insured for
Cherepovetskaya GRES in the amount of RUB 22 076 659 005, net of VAT. However, based
on the provided inventory data (OS-6 form certificates), the original book value of the damaged
equipment was as follows:
generator: 489 497 639,80 roubles;
steam turbine: 1 059 721 861,90 roubles;
gas turbine: 1 318 222 716,20 roubles.

We note that reinstatement costs for each piece of equipment do not exceed the said amounts.

We also confirm that the list of damaged equipment (Datasheet 0-1 provided herein) does not
include items that represent policy exclusions as per Appendix to the Loss Notice (Appendix
No.4 to the Policy (List of Excluded Property of Cherepovetskaya GRES).

We also note that the power unit reinstatement was based on the original design, without any
improvements and betterments.

Therefore, findings from our adjustment are provided in the datasheet below, as follows:

Datasheet 0-3

Claimed costs net of Recommended costs,

## Cost item
VAT, RUB RUB
Contract No.PO-ChG/05-2021 dated 24.05.2021 with LLC
1.
STGT
Supply of front hollow shaft of
1.1 41 924 211,99 41 924 211,99
the gas turbine
Supply of aft hollow shaft of the
1.2 25 202 279,56 25 202 279,56
gas turbine

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 Claimed costs net of Recommended costs,
## Cost item
VAT, RUB RUB
Supply of rotor ties for the gas
1.3 17 389 370,38 17 389 370,38
turbine
1.4 Supply of rotor clamp nut 2 401 351,16 0,00
Supply of compressor blades
1.5 No.1, 2, 3, 4, 7, 8, 9, 10, 12, 15 120 912 089,44 120 912 089,44
for the gas turbine
Supply of compressor rotor discs
1.6. stage No. 3 and 4 for the gas 41 519 717,70 41 519 717,70
turbine
Supply of the rotor for the
1.7 299 864 685,00 299 864 685,00
generator
Supply of thrust bearing for the
1.8 38 765 115,80 38 765 115,80
gas turbine compressor
Supply of supports for the 2 254 616,50
1.9 medium and low pressure 4 509 233,00
cylinder of the steam turbine
Supply of the frame for the
1.10 6 960 020,00 3 480 010,00
generator’s rotor
Supply of pedestals for the gas
1.11 4 295 384,00 2 147 692,00
turbine and generator
Supply of casings for carbon
1.12 67 676 498,43 67 676 498,43
seal rings of the generator
Supply of spares for the gas
1.13 turbine, steam turbine and 116 935 350,25 80 901 448,13
generator
Supply of bearings for the
1.14 15 079 595,83 15 079 595,83
generator
Dismantling and survey of
1.15 defects of the gas turbine, steam 71 499 730,66 71 499 730,66
turbine and generator
Cutting of steam turbine flange
1.16 1 905 077,00 1 905 077,00
at St.Petersburg port
Additional strip-down/assembly
1.17 12 100 000,00 12 100 000,00
of the gas turbine rotor
Calibration of mechanical details
and vibration control systems for
1.18 2 095 852,50 2 095 852,50
the gas turbine, steam turbine
and generator
Repair of the gas turbine, steam 270 847 890,48
1.19 274 325 367,19
turbine and generator
Contract No. US-ChG/05-2021 dated 31.05.2021 with LLC
2.
STGT
Installation supervision and
2.1 34 683 711,00 34 683 711,00
adjustment of the steam turbine
Contract No.DP-ChG/05-2021 dated 13.05.2021 with JSC
3.
TEK Mosenergo
Installation of steam turbine
3.1 equipment, pre-commissioning 106 507 187,72 100 448 062,72
and trials

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 Claimed costs net of Recommended costs,
## Cost item
VAT, RUB RUB
Contract No. 22-12/21-239 dated 21.06.2021 with LLC
4.
INGRA
Repair of the upper part of the
4.1 298 913,53 298 913,53
foundation of the turbine
Contract No. 22-12/21-286 dated 30.08.2021 with LLC
5.
Rosinter
Repair of the ventilation and
5.1 glass panels of the turbine 346 454,92 346 454,92
house
Contract No. 22-12/17-119 dated 29.12.2016 with LLC
6.
TER-Service
Survey of defects of the gas
6.1 turbine, steam turbine and 10 156 736,48 10 156 736,48
generator
Agreement on transfer of pledged property dated
7.
08.04.2021 with JSC Group E4
Supply of spares for the steam
7.1 301 119 974,51 296 367 664,71
turbine
Contract No. 22-12/21-202 dated 09.04.2021 with LLC
8.
Stone-Logistics
8.1 Transportation services 193 005 946,24 182 756 738,76
9. Customs charges 43 583 656,30 42 858 358,32
Deduction of return materials
10. (2 496 399,53) (13 777 538,77)
(salvage)
Total: 1 852 567 111,06 1 769 704 983,07

Following our adjustment, we have disallowed the Insured’s costs that are unrelated to the
incident or are not supported by documents. In particular, the disallowed costs include:
Supply of rotor clamp nut for the turbine generator, which was damaged as a result of
normal wear and during the strip-down;
Supply of repair tools and accessories (stand, frame, pedestal) for temporary use such
as equipment arrangement and storage during repairs after which the tools can be
returned to the manufacturing plant or used for maintenance of the power unit;
Supply of spares for replacement due to normal wear, unrelated to the incident;
Costs related to repair works, transportation services and customs charges have been
proportionately deducted in accordance with the number of necessary spares
(components).

We have also calculated the salvage value and adjusted the costs accordingly.

In the course of our adjustment, we also checked reinstatement costs against average market
rates, including the following:
In respect of contractor JSC TEK Mosenergo, we verified work completion certificates
(KS-2 forms) against Federal Unit Prices (FUP);
In respect of LLC Siemens Gas Turbine Technologies that is an authorized
representative of Siemens (equipment manufacturer), which had all necessary design
documents for repairs, we note that the contractor used their own rates, therefore, we

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 compared the cost of works with repair costs at Cherepovetskaya GRES (before the
accident) and other facilities of Siemens that include combined cycle plants based on
the gas turbine SGT5-4000F, namely, Tyumenskaya CHPP-2, CHPP 16 and CHPP 20
of JSC Mosenergo, and Yuzhnouralskaya GRES-2.

Following our review, we are able to confirm that the cost of contractor services is generally
consistent with market averages.

We note that following our meetings and discussions of indemnity calculations, the Insured
have confirmed their consent to the above adjsutment.

Therefore, following our review, recoverable costs are RUB 1 769 704 983,07.

FINAL SETTLEMENT
Following our adjustment, we have established that costs incurred by the Insured are
RUB 1 769 704 983,07. Therefore, the amount of indemnity is estimated at
RUB 1 759 704 983,07 net of the policy deductible, as follows:

Costs: RUB 1 769 704 983,07

Policy deductible: (10 000 000,00)
Total indemnity RUB 1 759 704 983,07

We, therefore, complete our adjustment of this claim. Should Underwriters agree to our
recommendations, we believe, the file in respect of this claim may be closed and reserves
canceled following the indemnity payment.

SUBROGATION
Given the investigated causes of the incident, we believe that Insurers do not have an
opportunity to subrogate at this time.

For MatthewsDaniel

ALEXEY LEBEDEV TIMUR MAGDEEV

General Director Loss Adjuster

Tel: + 7 (495) 228 58 91 Mobile: +7 (926) 823 97 88

Email: alexey.lebedev@matdan.ru Email: Timur.Magdeev@matdan.ru

Page | 18 // MDR1750
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info@matdan.ru

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