ogk-2: new issuer of the russian power market konstantin saurov, corporate governance director,
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OGK-2. OGK-2: New issuer of the Russian power market Konstantin Saurov, Corporate Governance Director, Conference « Emerging Europe » Istanbul , 2006 October, 5-6. First stage of Russian power sector reform envisages establishing of new companies generating and selling power at free market - PowerPoint PPT PresentationTRANSCRIPT
OGK-2
OGK-2: New issuer of the Russian power market
Konstantin Saurov, Corporate Governance Director,
Conference «Emerging Europe»Istanbul, 2006 October, 5-6
OGK-2
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OGK-2Power industry restructuring
First stage of Russian power sector reform envisages establishing of new companies generating and selling power at free market
Under Russia's power sector reform seven OGKs have been established: six of them are based on heat power plants, and one OGK is based on hydro generation assets.
OGK-2 is one of six heat power plants
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OGK-2History
March 09, 2005 - OGK-2 was founded according to the resolution of RAO United Energy Systems (UES).
OGK-2 unifies five large federal thermal power plants: Serovskaya TPP, Pskovskaya TPP, Troitskaya TPP, Stavropolskaya TPP and Surgutskaya TPP.
The powers of the sole executive body were delegated to OGK-2 since first quarter of 2005
September, 29 2006 - OGK-2 carried out a conversion to a single share and began functioning as an integrated operating company
3,35 ml. USD - total volume of dividends for first six months of year 2006.
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OGK-2 OGK-2: Mission and Objectives (up to 2010)
To become the leader in electricity generation and sales branches among thermal electricity generating companies by applying advanced management and production technologies. We aim to become a company chosen by shareholders, employees and partners.
To twice the company’s capitalization and attract private investors through: Continuous improvement of business efficiency and corporate
governance standards, ensuring the stable, long-term development of the company
Transparency for all parties, especially for potential private investors
Our mission
Our objectives (up to 2010)
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OGK-2Share capital structure
InvestorsQuantity of Shares
Including:
Share in Authorized Capital(%)
Qty of Preference
Shares
Qty of Ordinary Shares
Russian and Foreign minority investors
5,05 bln. 0 5,05 bln. 19,07
RAO UES of Russia 21,430 bln. 0 21,430 bln. 80,93
Share Capital (Total) 26,480 bln. 0 26,480 bln 100
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OGK-2Securities market
Authorized capital – 1 bln. USD
Capitalization of OGK-2 – 2 bln. 300 mln. USD ( 03.10.2006)
Shares are traded on two main Russian stock exchanges (MICEX and RTS) since July 2006
OGK-2 plans to hold IPO in 2007
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OGK-2Power Plant Locations
Surgutskaya TPP 3280МWТStavropolskaya TPP 2400МWТ
Troitskaya TPP 2059МWТ
Serovskaya TPP 526МWТ Pskovskaya TPP 430 МВТ
Branches of OGK-2 are located in the West Siberia, Urals, South and Noth-West regions of Russia .
Headquarter is located in Moscow.
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OGK-2Branches capacity and generation
Pskovskaya TPP
4%
Troitskaya TPP12%
Serovskaya TPP
8%
Surgutskaya TPP
55%
Stavropolskaya TPP 21%
Pskovskaya TPP
5%
Serovskaya TPP
6%
Troitskaya TPP24%
Surgutskaya TPP
37%Stavropol
skaya TPP 28%
Installed capacity Power generation
The output of OGK-2 power plants in 2005
Electricity 41,2 GWhHeat 2,4 bln. Gkal
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OGK-2Usage of installed capacities
OGK-4 65%
OGK-2 55%
OGK-1 52%
OGK-5 49%
OGK-3 38%
OGK-6 35%
Usage of installed capacities of OGK-2 is one of the most efficient in comparison with other OGKs
During 6 months 2006 usage of installed capacities improved up to 62%
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OGK-2Conditions of branches development
Surgutskaya TPP - location in the power-hungry Tyumen oil region.
Stavropolskaya TPP – to double export (Turkey, Rumania, Azerbaijan, Bulgaria), increase of regional power consumption up to 10% in 2010.
Pskovskaya TPP - increase in export (Baltic states, Belorussia) up to 8%, increase in regional power consumption up to 10% in 2010.
Serovskaya TPP – development of steel and aluminum business in Urals, increase in regional power consumption up to 650 МWт each year.
Troitskaya TPP – industrial development of Chelyabinsk region, increase in regional power consumption up to 250 МWт each year.
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OGK-2 Company’s main advantages
Large-scale and efficient power plants (Pskovskaya TPP, Surgutskaya TPP, Stavropolskaya TPP)
Independence from heat market and manoevring of power (all TPPs)
Location in the power-hungry regions
Huge opportunities for export deliveries (Stavropolskaya TPP, Pskovskaya TPP, Troitskaya TPP)
Power plants are located near fuel resources (coal, gas)
Diversified fuel balance of power plants (coal, gas)
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OGK-2Strategic targets
Intensive and sustainable power generation
Improvement of power plants capacity
To double capitalization
Increase in net income – 85%
Cost reduction – 10-15%
Expansion of generation and power sales
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OGK-2OGK-2: Scheme of Objectives
WGC-2: Value to Double
Business efficiency
Development of condensing units, and ensuring their long-term competitiveness
Improvement of competitiveness and increase of capacity factor
(at least 60% for operating units)
Transparency of activities
Expansion of possible capacity utilisation
Cost reduction by 10-15%
Corporate structure transparent for investors
Development strategy clear for investors
Investor-friendly disclosure standards
IR programme
SAP implementation
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OGK-2 Strategic issues: market
Market:
All fields of the wholesale power market: the day-ahead market, the real-time market, vesting contracts, bilateral contracts
Retail power market
Clients:
large industrial power consumers, supply companies, InterRAO (long-term contracts, such as vesting contracts and bilateral contracts)
Retail clients
Heat power resellers
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OGK-2 OGK-2: Production Strategy
Key measures: Finding ways to improve reliability and efficiency
Improvement of the technological features of the units, including: Expansion of capacity range for power generation Increasing the generator’s ability to vary load level within the range Improvement of the reliability of operating capacities Providing for GRES participation in frequency adjustment Dealing with environmental issues, such as the utilization of ash disposal areas, emissions, etc.
Reduction in production costs Energy conservation Improving equipment operation, including reducing the fuel expenditure rate Applying advanced power efficient technologies to reduce fuel expenditure, and improve installed capacity Case study of GRES coal diversification Repair programme optimization Reduction of repair terms Reducing the cost of material and technical resources, repair work, and other services, at the expense of applying
regulated purchasing procedures New power plants equipment – 1,2 Gwt (slide 18)
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OGK-2Environmental issues
Control over the emissions amount and the plants’ dumping to the circumambient air and water
Control over the condition of the environment
Organization of ecological training for the personnel of all TPPs;
Installation of equipment measuring emissions to the environment
Implementation of measures preventing emergency and other major emissions and dumping to the environment
Landscaping at the TPPs’ territories
Selling quotes in the framework of Kyoto agreement
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OGK-2 OGK-2 Projects Summary List for the Period until 2012
Development of a unified commercial centre operating on the electricity wholesale market, with centralised business processes in all segments of the electricity wholesale market
Development of own power marketing business via establishment of supply company operating in the electricity and heat retail markets
Projects aimed at providing reliability and increasing the efficiency of existing capacity; also, adding new capacity
Introduction of a quality assurance system in accordance with ISO 9001:2000
Development and introduction of a well-balanced system of indicators, monitoring instruments; controlled introduction of a corporate information and analytical system.
Corporate automated system that manages production and commercial operations with SAP R/3
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OGK-2Key investment projects
Stavropolskaya GRES construction of the gassteam energy block 450 MWt (560 mln USD)
Troitskaya GRES – construction of thecoal energy block 500 MWt (720 mln USD)
Serovskaya GRES – construction of the coal energy block 330 MWt (520 mln USD)
Serovskaya TPP30%
Troitskaya TPP39%
Stavropolskaya TPP
31%
Total investments – 1 800 mln USD
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OGK-2 Investment schedule (mln USD)
2007 – 2012
1,64
460,2
730785
460
219
280
100
200
300
400
500
600
700
800
2006 2007 2008 2009 2010 2011 2012
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OGK-2Financing
IPO – 750 mln USD
Loans – 800 mln USD
Bonds – 250 mln USD
IPO43%
Bonds 12%
Credits45%
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OGK-2
Under the strategy of OGK-2 RAO UES will reduce its part in authorized capital from 81% to 51% (preliminary)
OGK-2 plans to sell 30% of shares during IPO to different types of investors
Free float after IPO – 49%
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OGK-2
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