Page 91 - RusRPTSept20

“Increased localisation requirements continue to put pressure on the prospects of renewables projects in Russia and the absence of final rules for the upcoming selections creates more uncertainties for investors. As a result, some market players (such as Tplus) have expressed no wish to move on with new renewables projects,” VYBC said.
At the same time, players such as Enel Russia continue to reiterate over and over their wish to take part in the new DPM renewables selection (solar and wind): TGK1 has one wind project in mind and RusHydro is looking for small HPP projects, while InterRAO and Unipro have for the first time this year expressed their interest in renewables DPM as well. This is even part of InterRAO’s new long-term strategy.
“So, despite the challenges, Russian gencos are actively assessing their generation portfolios and searching for ways to make them more ESG- friendly,” VTBC said.
9.1.12 Transport sector news
In July, total railway cargo volumes fell 4mnt (4%) YoY to 104mnt. The largest drop was in oil and oil products, which declined 4mnt (18%) YoY. Then came coal and metals, which each lost 1mnt (3%) YoY. Construction cargos, fertilizers and grain volumes grew, slightly mitigating the total drop. Gondola lease rates fell another RUB 25 MoM (56% YoY) to RUB 800/day. Oil tank rates did not change from June, and were at RUB 875/day (13% YoY lower). Overall, the July numbers came out better than RZD’s target of a 6% YoY decline. However, the monopoly did not revise its target of a 5% YoY decline in 2020, which is 2pp below us. For August, it expects 5% YoY drop.
Coal. In July, coal volumes fell 3% YoY to 28mnt. Coal prices were USD 50/t for Europe (vs. USD 40-45/t breakeven) and USD 48/t for Far East export (vs. USD 40-45/t). We believe that prices were supported by operations at mines being halted.
Oil & oil products. The tank car segment was down 18% YoY to 16mnt. Due to the low demand and decline in crude oil production, refineries have started large-scale repairs, reducing output volumes. While tank lease rates were flat MoM at RUB 875/day, the decline in volumes put downside pressure, we believe.
Building materials. Construction materials continued their growth, and were up 6% YoY in July.
Metals. Metallurgical cargos declined 3% YoY to 20mnt. Ferrous metals declined the most: down 14% to 5mnt. However, iron ore volumes grew 3% to 11mnt against the backdrop of growing prices caused by constrained supply in Brazil.
Cost of repairs. Expenses for spare parts and repairs were around RUB 495/day in July, down 19% YTD. This rate is the minimum level to which gondolas rates could fall.
Railcars. The gondola fleet increased 1,202 units in June to 569,504 cars, and is up 2% YTD. The oil tanks fleet was stable at 178,753 cars.
91 RUSSIA Country Report September 2020 www.intellinews.com