Page 120 - RusRPTAug21

2030F. 100% of the investments in the sector are to be realised using the feed-in tariffs mechanism in one form or another.
Benefits are not spread evenly. This impressive investment programme in the sector, coupled with a guaranteed return, could become a viable value driver for equity names, although we would warn against sector-wide enthusiasm. Yes, RusHydro and Enel Russia could use this opportunity and double EBITDA from current levels, but Unipro and OGK2 are to see profits shrink, says VTBC.
The rest of the bank’s coverage (InterRAO, Mosenergo and TGK1) are to demonstrate growth at par or below cumulative CPI, limiting the capacities for a market outperformance. Moreover, we warn of the mounting CO2 price risks for the sector (see p. 13) and, yet again, only RusHydro and Enel Russia will be able to withstand the test of the global call to stop climate change.
On Monday 5 July, TGK1 reported that Shekinoazot had acquired 5,000 ‘green certificates’, which show that the energy supply from TGK1 is ‘green’. The deal was made through Sberbank’s blockchain platform. Previously, TGK1 had signed green energy supply contracts with Sibur, PhosAgro, AB InBev Efes and green certificates I-REC with Polyus. We see the news as supportive and positive, with TGK1 being an active part of providing green energy as part of the green energy drive in Russia. We expect green energy operators to be able to benefit from the development of the premium in Russia for green energy over traditional forms, and include an RSV premium in our valuation (see our Utilities Quarterly – 2Q21; GOELRO 2.2, of 5 July).
9.1.11 Metallurgy & mining sector news
Russia’s Ministry of Economic Development has decided to lower the minimal export tax on pig iron by over 50% to $54/t (vs. the previous rate of $115/t) and to keep the base export tax rate at 15%, Interfax reports. This decision comes after careful consideration and analysis of the profitability of pig iron exporters, and the new rate matches the export tax for hot briquetted iron (HBI). The new export tax on steel, iron ore products and base metals should take effect in August and last until the end of the year, and it is likely to affect RUSAL the most, along with export-focused Evraz and NLMK. The initial reaction to the announcement of new taxes by the market suggests that it expects the taxes to be a one-off (Market reacts to new export tax, 25 June).
9.1.12 Transport sector news
● Ships
The Association of Sea Ports released June operating results for container sea terminals on Friday, 9 July. The Russian segment of Global Ports saw its total container turnover increase 20.5% YoY to 142,400
120 RUSSIA Country Report August 2021 www.intellinews.com