Page 140 - RusRPTJul21

transferring its 3.889% stake in OGK-2 (worth R3.41 bln based on the market price of around R0.79/share as of June 29) and conceding R5.67 bln in debt owed by MOEK for heat energy that was supplied to it (MOEK is a GEH-controlled company) to GEH. As payment for these assets, GEH is transferring to Mosenergo the right to demand the remaining payment (R9.64 bln) for Adler TPP from OGK-2 (OGK-2 acquired it from GEH in November 2020 for around R10 bln excluding VAT).
RusHydro has held an Analyst Day devoted to its new long-term strategy.
The company was represented by Deputy CEOs Sergey Terebulin, Roman Berdnikov and Sergey Kirov. The key messages were as follows.
· The dividend policy was recently prolonged to 2026. If the Ministry of Finance’s document on the adjusted net income base for dividends becomes a decree, RusHydro's dividend policy would be adjusted.
· The Board has approved the long-term strategy. RusHydro will be focused on digitalisation, growth and ESG. Investments will include: o DPM2 in the Russian Far East (2GW of capacity, with coal-fired
Neryungrinskaya and Partizanskaya GRES, and the rest being
gas-fired);
o renewables DPM (current small HPP and participation in the
new auctions);
o large HPP (Ust-Srednekanskaya HPP, potentially 340-360MW
Krapivinskaya HPP due to the region's interest and possibility of supply to aluminium smelter, Zagorskaya GAES-2 (DPM from 2024 with no fines, the decision is due by 1Q22) and other large HPP, GAES that are discussed as part of general scheme and potentially for further BAM expansion – decisions on who pays are key).
· The Russian Far East DPM2 return is due to be approved soon (12-14% discussed). The renewables DPM has a 12% return, while large HPP construction is to be assessed case-by-case.
· No structural changes to the company are being considered, or changes to the ownership between Far Eastern assets and the parent company.
· No major write offs in 2021-22. Small ones are possible, post-2022 they are to reappear due to the commissioning of Ust-Srednekanskaya HPP and the Pevek-Bilibino line (no subsidy was approved).
· The strategy implies 1.5x EBITDA growth by 2025 vs. 2020 and 2x by 2035 (due to the commissioning of Zagorskaya GAES-2, DPM2, small HPPs and Ust-Srednekanskaya HPP), debt/EBITDA <3x by 2025 and <2x by 2030 with a conservative scenario.
· GHG emissions targets are a 6% reduction by 2025 vs. 2015 and 9% by 2035, including the planned projects in the Russian Far East. The company noted being able to approve two coal projects being gas-fired in the Russian Far East, while gas supply for future projects remains a problem.
140 RUSSIA Country Report July 2021 www.intellinews.com