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encourage investment into new generation facilities. Several market orientated reforms have already put in place to create a market for power that attracted massive investment during the privatisation phase overseen by Anatoly Chubais. “The main parameters of the previous plan were left intact, including a longer contract period -- now three years instead of one -- for KOM auctions and additional KOM price indexation in 2022-24, a 14% base rate for modernization contracts and a 90% localization requirement with extended grace periods for large-scale local equipment (meaning turbines with installed capacity of more than 65 MW),” Sberbank CIB said in a note. “In addition, there are preferences provided for projects that entail converting conventional cycle gas units to CCGTs (combined-cycle gas turbine power plants), one being lower utilization requirements. As we already see in the case of CSA-contracted CCGTs, the upgrade should lead to better operating efficiency and higher loads,” Sberbank added.
9.1.12 Transport sector news
Russia’s freight turnover continued to be strong in July , adding 5% y/y in July, while volume gains decelerated to 1% y/y. Grain, iron ore and ferrous metals grew fastest, 15% y/y, 10% y/y and 8% y/y, while coal volume expanded 4% y/y, albeit by less than last month. Volumes of construction materials, the worst performer, fell 10% y/y. Gondola lease rates moved up to RUB 1,775/day, an increase of almost 30% y/y.
Coal. Coal volume growth subsided to 4%. Coal prices remain strong: the CIF ARA thermal coal price added 5%, exceeding USD 100/t mark, while the FOB Newcastle price also increased, to $118/t;
Oil & oil products . Volumes in the oil and oil products segment continue to be flattish – 1% lower y/y, and virtually flat y/y over 7mo18.
Building materials . As the main victim of high lease rates for gondolas and growing coal prices, construction materials have been losing volumes since March, with a 10% y/y decrease in July (the same rate as in June).
Metals . Iron ore added 10% y/y, ferrous metals 8% and scrap 7%. Base metal ore was flat y/y. Altogether, metallurgical cargo volumes were 8% stronger y/y, while for 7mo18 they were 6% higher y/y.
Others . Grain volume was up 15% y/y in July, the leading category. In other cargos, lumber added 3% y/y, while chemicals retreated 4%.
Outlook . July trends are on track to deliver 5% growth in freight turnover and 3% in volumes. With a strong the third quarter of 2018 ahead, and lease rates continuing to climb, we see a positive cross-read for Globaltrans (its the first half of 2018 IFRS results, due to 28 August, are its major catalyst).
President Vladimir Putin has signed the bill stipulating prices and tariffs on services in the country’s ports set in Russian rubles into law. The document passed by the State Duma (lower house of parliament) on July 26 and approved by the Federation Council (upper house) on July 28 was published on the official website of legal information on August 3.The document specifies a transition period until January 1, 2015 for Russian legal entities with foreign exchange liabilities for investing in seaport infrastructure development as of January 1, 2018.
The Centre for Infrastructure Economics (CIE) estimates that the construction of a high-speed rail (HSR) from Yekaterinburg to Chelyabinsk will indirectly add RUB2.2 trillion ($32.6bn) to Russia’s GDP by 2034. GDP growth from the project will commence as soon as construction begins, currently planned for 2020, and continue as the HSR enters operation
98 RUSSIA Country Report September 2018 www.intellinews.com