February 6, 2018. Moscow, Russia.
PJSC RusHydro (ticker symbol: MOEX, LSE: HYDR; OTCQX: RSHYY)
announces that the Company's Board of Directors held a regular
meeting on February 5, 2017.
The Board of Directors approved entering into the
loan agreement between PJSC RusHydro and JSC Far East and Baikal
Region Development Fund as an interested party transaction.
The loan in the amount of not more than RUB 7 bn
is raised by RusHydro to finance construction of off-site
infrastructure facilities for Sakhalin GRES-2 at an interest of 5%
per annum to be repaid no later than June 30, 2026. The Fund, being a
state development institution, finances projects in the Far East
using direct State support mechanisms. The terms of the loan provided
by the Fund, including the discounted rate would help PJSC RusHydro
reduce the project’s financing cost as opposed to borrowing at the
current market rate.
The Board of Directors approved to conduct a major
transaction – property lease agreement between JSC Sakhalin GRES-2
and PJSC Sakhalinenergo and authorized representatives of the Company
to approve the lease of Sakhalin GRES-2 (1st stage) asset to PJSC
Sakhalinenergo at the General Meeting of Shareholders of Sakhalin JSC
The decision was made to transfer the operation of
the new electric power plant to PJSC Sakhalinenergo, a RusHydro
operating company, once the plant is commissioned in 2018.
The 1st stage of Sakhalin GRES-2 is one
of RusHydro’s four priority investment projects in the Far East.
The project will replace retired capacity of Sakhalin GRES and
increase the power supply of the isolated island power system in the
light of long-term economic growth. Commissioning of Sakhalin GRES-2
will create reliability margin and facilitate industrial production
growth, manufacturing and housing in the region.
The Board of Directors approved the Group’s
contributions to the authorized capital of JSC Chukotenergo for the
implementation of the initial construction phase of two 110 kV high
voltage overhead power lines Pevek – Bilibino.
Capital expenditures of the initial construction
phase of overhead lines are measured at RUB 18 bn. Technical
examination of the project has taken place. In the first quarter of
2018 conclusion of the state expert evaluation upon which the
construction cost of the overhead lines will be determined is
expected to be received.
Project financing is expected to be provided in
the amount of RUB 13 bn from the Federal budget and RUB 5 bn from the
High voltage power lines construction project in
Chukotka is carried out in connection with upcoming modernization of
Chaun-Bilibinskiy energy hub following decommissioning of nuclear
power plant units of Bilibino nuclear power plant that has reached
the end of its service life. Construction of 110 kV high voltage
overhead power lines Pevek – Bilibino will further expand power
supply in the Chukotka autonomous region and provide sustainable
growth of the Far East energy sector.
The Board of Directors reviewed the initiatives to
improve reliability at the RusHydro’s power facilities.
Since 2012, RusHydro is carrying out a
comprehensive modernization program of hydropower plants. By 2025,
the Company plans to replace 55% of its turbines, 42% of its electric
power generators and 61% of its transformers. The program will help
reverse the aging trend of prime hydropower generation equipment and
reduce maintenance costs thanks to automation and reduced number of
repairs. Upon completion of the program, the Group’s total capacity
will increase by 779 MW while electricity production will increase by
1,375.6 MWh per year.
Since the start of the program 87 hydro turbines,
67 electric power generators and 59 transformers were replaced,
representing 43%, 36% and 32% of the planned placement respectively.
Replacement of obsolete equipment is essentially important for
improving reliability and safety of RusHydro’s facilities.
RusHydro is finalizing development of the
long-term program of replacement of obsolete thermal generation
capacity in the Far East, providing replacement of combined 1.3 GW of
obsolete thermal generation capacity. The Company also proposed
mechanisms, providing for return on investment in electric and heat
generation capacity in the Far East Federal District. The proposal
assumes that return on investment will be guaranteed within thermal
generation modernization program due to continuation of investment
sources, released due to completion of capacity supply agreements,
committed earlier in European part of Russia and Siberia.
The Board of Director took information note.
The Board of Director reviewed information on
compliance with conditions of RusHydro’s participation in
completion of Taishet Aluminium Smelter jointly with UC RUSAL. The
Board of Directors has approved preliminary results of structuring
participation in the project on September 1, 2017.
According to decision of the Board, substantial
conditions for participation in the project, providing for guaranteed
stable financial conditions of RusHydro, will be presented to the
Board of Directors for approval in the end of first quarter of 2018.
The Board of Director approved report on
implementation of Charitable and Sponsorship Program in 2017 as well
as the Charitable and Sponsorship Program for 2018.
During 2017, designated as the Year of Environment
in Russia, RusHydro has implemented six charitable and socially
important programs in the field of environmental protection and
conservation of biodiversity. One of the implemented projects, new
for the Company, was support of Severtsev Institute of Ecology and
Evolution of the Russian Academy of Sciences project in the Caucasus,
aimed at restoration of population of Persian leopard, an endangered
species, included in the Red Book.
During 2017 RusHydro continued “Ecological
paths” project – joint effort with the Russian reserves aimed at
conservation of natural habitat of rare and endangered animals and
plants, cleaning of river banks, fish stocking of reservoirs,
cooperation with the Center for conservation of Amur tiger population
and the Russian Geographic Society. Environmental responsibility is
one of the highest priorities of RusHydro.
In addition to implementation of environmental
projects in 2017, RusHydro continued long-term charitable program
“Clean Energy” aimed at support of orphanages, education, medical
and sports institutions. Joint project with Literature for Children
Foundation “Want to know all” book was prepared and published.
In 2018 RusHydro will continue charitable and
The Board of Director approved report on
implementation on Plan of divestment of non-core assets for the
fourth quarter of 2016 and 2017.
During that period, RusHydro sold 238 non-core
assets with total worth of RUB 193.6 mn. The maintenance of the
assets cost the company RUB 23 million per year.
Divested assets include minority stake in PJSC
Irkutskenergo, PJSC Krasnoyarskaya HPP, OAO Zharki as well as other
assets (apartments and tunnel in Karachay-Cherkessia Republic). A
number of non-core assets, such as waste storage site in Amur region
were handed over to Administration of Bureya region. An obsolete
industrial building and overhead communications network were
RusHydro aims to improve asset management
efficiency. Divestment of non-core assets, reduction of maintenance
cost and sale of minority stakes in companies of no interest to
RusHydro Group is in line with the company’s priorities.