Sergey Kirov
Member of the Management Board,
First Deputy General Director
– How exactly the crisis of 2015 has affected the financial and economic performance of the Company?
– Indeed, the financial and economic situation of the last year was not easy due to the inherent issues of the Russian economy and, in particular, the sanctions. We were ready to meet these challenges. We undertook a number of preventive measures: we reduced our semi-fixed costs and optimised the investment programme. We also reviewed a number of design assignments for upgrading equipment and new construction projects, and for a number of equipment components, we replaced foreign components with Russian made products. We virtually transferred the cash flow management to the manual mode, especially in the first half of 2015. These actions helped us successfully meet the challenges, and our financial and economic performance by the end of 2015 was faily stable.
– What factors RusHydro takes into account when building and optimising its investment portfolio?
– As to new construction projects, within two years we need to complete the construction of four thermal generation facilities in the Far East that are under construction in compliance with the Presidential Decree on additional RusHydro capitalisation. We launched one of the facilities in 2015. Another start-up is scheduled for 2016 and two start-ups for 2017.
As to harnessing of hydeopower potential, the commissioning of Nizhne-Bureyskaya HPP in the Far East is scheduled for the late 2016 – early 2017. The Bureya River has been recently dammed, which is a significant event. This means that the facility is at the final stage of construction. Simultaneously, the construction of the Ust-Srednekamskaya HPP is in progress where the third power unit is being installed.
This is a significant contribution to the Far East energy infrastructure development. After all, to extend their activities in the region the consumers need more power. It is the infrastructure that gives impetus to this region development. The state authorities made a lot of efforts to support the upgrading of the Far Eastpower generating systems and grid facilities.
Similarly, in the Magadan Region, power engineering investments within the framework of the regional development programme are aligned with the investment plans of the gold mining industry. As far as I know, Natalka gold deposit is one of the most large-scale explored gold deposits in Russia.
As to rehabilitation and modernization of main equipment, RusHydro’s Integrated Modernisation Program was approved by the Board of Directors in 2012 after a comprehensive examination of the equipment at all HPPs, taking into account the consequences of the Sayano-Shushenskaya HPP accident. The program focuses on the improving the index of equipment obsolescence. We continue implementing this programme.
Based on the current situation, we have somewhat reduced the funding of this program and have been looking for ways to reduce costs, among other things, taking into account the competitive procurement procedures and import substitution program. We also put off some non-urgent works where it is possible.
All in all, we have been looking for a balance in order to maintain reliable installed capacity, which generates most of the revenues for Company, and guarantee reliable power supply to our consumers.
The general thrust is to maximize economic efficiency in the framework of general strategic priorities.