George Rizhinashvili
Member of the Management Board,
First Deputy General Director
– The Strategic Plan until 2015 with an outlook up to 2020 was adopted in 2010. Did you achieve the targets set five years ago?
– We launched 3500 MW of new capacities and restored Sayano-Shushenskaya HPP to the target values – 6400 MW of installed capacity.
There was a capacity figure for renewable energy sources that we had to provide. We made corrections in Strategy 2010. Particularly, we decided to concentrate on major projects, neglecting small plants and small HPPs.
There were also certain changes in international activities for the last five years. For example, we abandoned the idea of international investment activities, i.e. we did not acquire assets abroad. Both the Board of Directors and the government decided that we needed to focus on management of assetsin Russia. However, we have certain services abroad, which are RusHydro’s supporting businesses.
The strategy was broadly implemented. We are preparing a new Strategy for 2015-2020 with an outlook up to 2025.
– Could you name the main targets of this new strategy?
– The main difference from the previous document is that we have developed so-called “target points” for the Company by the end of the relevant planning period.
What does it mean? If we talk about the Company’s mission, it is important to ask a simple question: what will become of the Company in ten years? What may be the options in answering this question? For example, RusHydro currently manages energy assets in the Far East. Question: Will it continue managing these assets in ten years, or it will cease managing them after a certain restructuring? It is an interesting cross-road that requires a systematical approach, analysing the financial model and making the decision on the basis of the analysis. If the target state is “we stay together”, what key short-term strategic actions must be implemented in the RAO ES of the East management? This means changing RusHydro’s target capital structure for restructuring the debt of RAO ES of the East, the tariff policy, creating good conditions for investments in the Far East energy sector. Clearly, all this must comply with the government policy in the field of Far East asset management. However, this option assumes the significant difference in the achievable value of the Company.
By the way, RAO ES of the East’s net income and revenues, as well as engineering stability index have fundamentally changed for the better after we obtained the controlling interest from the state. Now we need a breakthrough, which would remove the debt burden, improve the tariff policy and create opportunities for investment in new power generating facilities in the Far East over the next five years.
The Rehabilitation and Modernization Programme may give different scope under the annual average value of not more than 30 billion RUB. Annual average efficiency is around 14-15%. It turns out that we annually generate about five billion RUB of extra value from the Integrated Modernisation Programme worth of 30 billion RUB. Roughly speaking, around 50 billion RUB of added value are generated only by this program, we are talking about non-discounted figures.
– Does the current thermal and hydro generating ratio remain unchanged?
– The current generation ratio is 75 to 25 %, while the capacity ratio is 70 to 30 %. I think that this ratio will remain unchanged. If the thermal capacity rating becomes more active, plus there are four facilities under construction in compliance with Decreeof the President of the Russian Federation, the proportion may be changed in favour of thermal generation.
– What is the Company`s business model?
– Our business model is very simple: effective management of hydropower plants mintaining overall reliability and energy security of the operating hydropower facilities, as well as value maximisation for the shareholders.
Secondly, improving RAO ES of the East short-term performance and implementing systemic stabilisation measures for the Far East energy assets in terms of debt restructuring and improving the tariff policy.
In fact, these two segments form the stability of our business, which has led to the fact that, we will pay record dividends for 2015- 15 billion RUB.