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guidance for 2021-23, we had to raise our capex assumptions for the period by more than 25%. The company attributed the revision to the postponement of capex from 2020 to later periods and FX effects. The latter could be mitigated by hedging instruments going forward.
Limited capacity for new investment. Though Enel Russia plans to consider new renewables projects and is looking into localized gas turbine tenders in Russia, the investment capacity of the company is currently limited given that it expects net debt/EBITDA to be around 3.4 at the end of 2023. We believe this could mean that the parent company Enel Group would need to get involved if any lucrative projects appear in the Russian market. Enel Russia could also sell some of its gas assets or do an SPO to finance incremental capex.
Sberbank CIB said in a note it had downgraded Enel Russia to HOLD with a R0.97 per share 12-month DCF-based target price.
Enel Russia is assessing the possibility of constructing wind projects in the Leningrad region (in Volosovo and Koporye). According to SPARK, Enel Green Power owns the Koporye wind project company (registered in June 2020), as mentioned by the governor of the region, Alexaner Drozdenko. In addition, TGK1 is assessing wind projects in the region, while the Sviritsa wind project is in the process of getting approval to be located in the Volkhov district. All the projects would imply 265MW of capacity. Enel Russia is in the process of constructing three wind projects in the Rostov, Murmansk and Stavropol regions, and has been vocal about looking to expand its renewable portfolio and take part in the new DPM renewables auctions. Thus, we believe it is assessing the wind projects in the Leningrad Region for the potential bidding at the upcoming auctions (there is an active discussion about prolonging renewable DPM), while TGK1 has also noted its plans for the wind project. Neither Enel Russia nor TGK1 were able to get any allocation in the additional selection of wind projects at the end of 2020.
Enel Russia is to build wind project in the Stavropol region. On 25 February, Interfax reported, citing the Ministry of Industrial Production, that RosAtom and Enel Russia would build five wind farms in the Stavropol region for RUB59.6bn, with four projects to be undertaken by RosAtom (three to be commissioned in 2021 and one in 2022) and the Belomechetskaya wind farm by Enel Russia (to be commissioned in 2024). The Belomechetskaya wind farm had previously been discussed by Enel Russia, as well as the Rodnikovsky wind farm in Stavropol, with the latter being selected at the DPM renewables auction for 2024. OOO Belomechetskaya wind farm is a company related to Enel Russia, according to the 2020 disclosure. At the same time, with no recent comments by the company on this particular project, and the stated intention to undertake wind farm construction projects only as part of the DPM renewables mechanism (that is due to be prolonged after 2024, with terms yet to be finalised), we believe the project is more likely to be assessed by Enel Russia with commissioning post-2024 (like the projects in Tatarstan
150 RUSSIA Country Report March 2021 www.intellinews.com