“On April 4, transmission and distribution assets merged to form one company, namely Russian Grids. Currently, our main goal is to get maximum benefit from this consolidation for all: customers, the government, and our minority shareholders and investors,” Oleg Budargin noted in his opening remarks.
The head of Russian Grids underlined that the Company is taking certain measures to maintain the financial stability and investment potential of the Group. These measures focus on streamlining business processes.
“In the course of forming the new company and pursuing the development strategy of the electric grid sector—given how acute the existing problems are—I believe that zero tariff growth creates favorable conditions for putting our management system in order. This is primarily about mobilizing efforts and resources to improve electricity supply reliability and enhance the customer’s confidence,” the head of the electric utility group emphasized.
In this connection, Oleg Budargin pointed out several areas of action for the near future, including systematic cost-cutting decisions and a reduction in the levels of the managerial chain.
According to him, the most notable results achieved by the Russian Grids Group this year include making the electric grid infrastructure more affordable and shortening the length of network connection. These achievements were reflected in the World Bank’s Doing Business report: Russia climbed as high as 67 positions in 2013 in the “Getting Electricity” ranking. The Russian Grids Group has the potential for keeping up the pace in this area and raising the quality of work on setting up the grid infrastructure, Oleg Budargin said.
The head of the electric utility group also mentioned Russian Grids efforts to consolidate territorial grid organizations. “Our most important priority is electricity supply reliability and quality. In this connection, we regard such consolidation as an opportunity to establish uniform rules for grid operation and restore the customer’s confidence. This is particularly vital in the new tariff environment,” Oleg Budargin said. As estimated by Russian Grids, the annual volume of the territorial grid organizations market is about 150 billion rubles.
The meeting also discussed how the capex program is affected by the grid sector’s new operational conditions. The Company seeks to adequately reduce output based on forecasted growth in electricity consumption, Russian Grids representatives explained. Additionally, the Group is working hard to obtain financing other than debt financing and public funding to carry out large infrastructural projects. The Company believes that costs associated with the implementation of its repair and capex programs can be additionally cut by being oriented to domestic manufacturers of electrical equipment and using complicated and expensive technical solutions in an economically feasible way.
Oleg Budargin also told the meeting that, in addition, the Company was faced with the no less important task of making it more transparent to shareholders and the investor community. “Hopefully, such meetings will be regular. I am convinced that this will enable the Russian Grids Group to improve its operational efficiency, stabilize its performance, achieve sustained growth, and make it more attractive to investors,” the head of Russian Grids emphasized.