Page 107 - Russia OUTLOOK 2023

attractiveness of the Russian IT sector." The CSR report was prepared after
Ivan Tavrin's KCG bought Avito from Prosus. The resource was sold more
cheaply than it could have been, including because of Gorelkin's bill, reminds
Kommersant.

Utilities and energy:

Russia’s power demand was flat in November and prices were down a
bit. November spot prices were down by 2.5% y/y, while consumption was up
0.4%, according to consumption and power price statistics from the Market
Council. The data reveal a lack of direction in European Russia, while
wholesale spot power prices in Siberia (due to low hydrology) were up a great
deal (+28.1%), so mixed. Sales of electricity account for roughly 60% of
gencos’ revenues, ex-DPMs. Hence we track the pricing and demand levels. In
isolation, spot prices translate into flat to declining margins from electricity
sales. However, in the power market framework that separates power and
capacity payments, gencos may source a significant part of their revenues
from stable capacity flow, which was indexed by 25% y/y in 2022 and analysts
expect this will go up further by 15% in 2023.

Russian nuclear state corporation Rosatom and about 20 countries are
negotiating new projects, head of Rosatom Alexey Likhachev said in an
interview with the Rossiya-24 TV channel on the 15th anniversary of the
creation of the state corporation. This includes long-standing partners of the
corporation such as Bangladesh, India, Egypt, China and Turkey, he added.
Rosatom is marking 15 years since its establishment. It is one of the top three
in the nuclear fuel cycle services market, ranking second in uranium mining,
first in uranium enrichment and third in fuel production. Rosatom is also the
world leader in terms of the number of power units of nuclear power plants
(NPPs) in the portfolio of foreign orders and accounts for 70% of the global
NPP construction market.

Metals:

Russia’s steel sector surprised this year as despite the sanctions,
logistical bottlenecks and contracting economy, steel production was up
4.8% y/y during 10M22 while general economic growth was down 2.1% in the
same period, BCS GM reports.

Normally steel production is closely associated with economic activity.
Moreover, this year Russian steel exports have been hampered by sanctions
on things like shipping that have both reduced exports and also clogged up
Russia’s railways. Many companies are seeking to re-orientate exports to Asia
by sending their goods by rail across the country in bulk.

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