Page 134 - RusRPTDec20

with GE on 20 November. InterRAO is to invest RUB64.2bn ​into the localisation of the large GE turbines in Russia, with InterRAO Electricity Generation providing the loan to another subsidiary of InterRAO, RAO Intertech B.V., for this purpose. Moreover, the company has an option to buy GE’s share in the joint venture in 4-6 years (with the possibility of a one-year prolongation) with a maximum price tag of €50mn (RUB4.5bn at the current exchange rate). The company has been moving quickly with tapping into the localisation of large turbines in Russia. InterRAO now owns 51% in the JV (Russian Gas Turbines) with GE, has purchased the licence for 25 years, is expecting an overall RUB64.2bn investment into the localisation project and has an option to buy out GE’s share for RUB4.5bn at the current exchange rate (a price of RUB3.3bn as of 30 September). While, overall, the news was not unexpected, with the development of turbine production being part of the company's long-term strategy (see our InterRAO – Strategy requires patience, of 30 September), the RUB65bn capex for localisation is somewhat higher than the RUB40-45bn guided by management and our expectations of RUB50bn, although according to the disclosure this includes the interest payments. Along with that, the buyout price tag is lower than our forecasts. On our estimates, the project could have a RUB4.6bn run-rate EBITDA (see our InterRAO – 2025 strategy bootcamp, of 27 October) with InterRAO working on ensuring the backlog for turbines, noting DPM2 and Vostok Oil as the potential opportunities.
Enel Russia​ released its 3Q20 IFRS results on Friday, 30 October. Revenue for 3Q20 decreased 36.2% YoY to RUB 11.1bn, EBITDA declined 58.6% YoY to RUB 1.7bn and net income was down 82.9% YoY to RUB 0.3bn. The decline in IFRS results was due to the high base effect of last year, which at the time included Reftinskaya GRES (Reftinskaya GRES accounted for 51% of Enel Russia’s total electricity generation in 3Q19). Enel saw electricity generation drop 49.7% YoY in 3Q20, while the adjusted operating results were up 3.3% YoY to 5.1mn MWh. The company saw a 36.2% YoY decline at the revenue level, with revenue from electricity generation down 40.4% YoY to RUB 7.3bn. Capacity sales declined 28.1% YoY to RUB 10.5bn and heat sales fell 14% YoY to RUB 0.6bn over 3Q20. Revenue was only 1.3% YoY lower than we estimated. Operating expenses dropped 28.7% YoY to RUB 10.1bn due to the absence of costs associated with Reftinskaya GRES. Fuel expenses were higher than we expected due to the usage of less efficient energy units, as maintenance works were carried out on the more efficient ones. EBITDA declined 58.6% YoY to RUB 1.7bn, which is 38.7% YoY weaker than we expected. Net income was down 82.9% YoY to RUB 0.4bn in 3Q20. The company expects to see some minor delays in WPP construction and commissioning due to COVID-19-related issues, which could result in the capacity payment to the company being delayed. Moreover, Enel Russia could face fines for this delay. According to the company, they are waiting for the regulator to make a decision on exemptions to fines because of COVID-19-related delays.
134 ​RUSSIA Country Report​ December 2020 www.intellinews.com