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November 9, 2015

Vladimir Putin with ROSSETI Group CEO Oleg Budargin the companyís three-year results and preparation for WS

President of Russia Vladimir Putin: Mr Budargin, nearly three years have passed since Russian Grids was established. A lot of work has been accomplished over this time, especially in terms of improving work in this sector. As far as I know, the average cost of getting connected to the grid is nearly three times lower now.

Director General of ROSSETI Oleg Budargin: Yes, three times lower.
Vladimir Putin: And there has been a reduction in the number of stages one has to go through to get connected. Particular efforts have been made to support the agriculture sector, and there are other results too that show that this time has been put to good use. But Iím sure there are still problems too, so letís talk about them now.

Of course, given the time of year, we should also discuss the situation with preparations for the winter heating season. Please, go ahead.

Oleg Budargin: Mr President, In accordance with your executive order of November 22, 2012, ROSSETI was established. The company unites state mainline and electricity distribution assets and now covers transportation of 70 percent of the electricity produced in Russia.

The company employs 218,000 people. Our teamís main priorities are to guarantee a high level of reliability, access to the electricity system, and keep our customersí trust.

Compared to the 2012 figures, we have succeeded in bringing down the number of technological violations and accidents by 36 percent. We are making a big effort now to speed up the time it takes to do repairs after accidents and technological problems. In 2012, it took us 4 hours on average, but now, even in accidents and bad weather, our team is able to restore power in 2.7 hours.
For our special priority customers, we make sure the power supply keeps going unrestricted even when accidents happen on the grid. We have more than 4,000 reserve power sources with total capacity of 360 megawatts for this purpose, and do everything possible to ensure that important customers have no interruptions to their power supply at all.

The electricity system is already working in winter operation mode. Many regions already have below freezing temperatures. Despite the tough rate restrictions, our companies are able to maintain the physical volume of repair and preparation work needed to get ready for the winter season. All of the teams and subunits completed repair work by October 15 and started working in winter operation mode.

This year, we increased the number of accident prevention training sessions with staff. We held 2,000 such training sessions this year. We have completely fitted out all of our production units with emergency reserve capacity, and have increased the physical volume of emergency reserve capacity by 71 percent compared to 2012. This guarantees reliability and swift restoration of electricity supply to our customers in the event of breakdowns.
We have 508 mobile brigades working throughout the country. At any time of night or day, they can carry out the work needed to ensure reliable power supply.

All 147 branches and units of company have received the necessary permits from the Energy Ministry and Rostekhnadzor (Federal Service for Environmental, Technological and Nuclear Supervision) for work over the winter period. Today, our team is working to ensure reliable supply.

ROSSETI is taking a responsible approach to your instruction to ensure access to the network and speed up infrastructure development. Just a few days ago, the World Bank published a rating of countries that assessed, in particular, connection to the electricity network. In Russia, it assessed Moscow and St Petersburg. In 2012, we were in 143rd place, but this year, we are in 29th place, and we come first among the BRICS countries.

Russiaís energy system scored the highest possible mark for reliability. Of the 189 countries in the ranking, only 19 earned the highest mark for electricity network reliability, and Russia was one of them.

This year, the number of applications for technical connection to the network has increased by 20 percent. This is also a sign of trust in our company. Of course, we still do have many problems that we must address in comprehensive fashion. We are working today with Gazprom and with other infrastructure companies, so as to reach the customer together, connect sites together, and make it possible to work at the best of our strength. Execution of contracts has increased by 64 percent this year. In other words, the number of applications is up by 20 percent, and the execution of contracts has increased too, which of course ensures better quality of service for our customers.

You noted that we cut the cost of getting connected three-fold. We hope that greater efficiency and cost-cutting efforts will enable us to bring down this cost yet further.

82 percent of our contracts with households and small and medium businesses are carried out within 90 days. All 15 subsidiaries part of the ROSSETI company have worked on bringing down their operating costs over these last three years. We have cut operating costs by 15 percent, thus saving 46 billion rubles. We have reduced losses in the electricity networks and saved 16.3 billion rubles for Russian Grids and for the economy as a whole.

Mr. President, the team at ROSSETI has done a lot to develop the company. This is a complex and difficult process, but we have managed this first stage. We have done a lot to improve reliability, and the employees have played a big part in this: labour productivity has increased by 14 percent over these three years.
We still have much work ahead. Firstly, we need to consolidate our results and continue to improve efficiency. There are many issues that need addressing here. We need to carry out our modernization program. This is a priority task because we do face the problem of worn-out installations. Together with the industrial enterprises and state corporation Rostech, we are developing a comprehensive program and working together on its implementation.
We are on a stable upward track as far as reliability and production are concerned, Mr President. The entire ROSSETI company is consolidating, and so are all of the subsidiaries and branches. In financial terms, we consolidate all positive results, but there are some subsidiaries that still have financial difficulties. We are working actively with the Government, the Energy Ministry and the Federal Anti-Monopoly Service to settle these issues swiftly.
Probably the most urgent task right now is to optimise the unified national gridís management structure.




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