russia post elections: great expectations viii annual investor conference moscow, russia 22.06.2004...
TRANSCRIPT
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RAO UES of Russia: The energy of the reformRUSSIA POST ELECTIONS: GREAT EXPECTATIONS VIII ANNUAL INVESTOR CONFERENCE Moscow, Russia22.06.2004Speech of the Chairman of the Management Boardof RAO UES of Russia A. Chubais
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TWhOverview of Russia and Russian Electricity SectorPositive Consumption TrendRussia: 4th Largest Power Producer in the World in 20033,8641,4721,03388958858057754638332801,0002,0003,0004,0005,000USChinaJapanRussiaCanadaGermanyIndiaFranceUKBrazil25.0%9.5%6.7%5.7%3.8%3.7%3.7%3.5%2.5%2.1%% of WorldTotalTWhOptimistic ScenarioPessimistic Scenario199019951996199719981999200020012002200320042005201020151,073841828813809832863875879889945911
1,1351,0201,3151,1001,5451,2008972020Source: IEASource: Energy Recearch Institut, Russian Academy of Sciences
Chart
965
1073
841
828
813
809
832
863
995
1135
1315
1545
1985
1990
1995
1996
1997
1998
1999
2000
2005
2010
2015
2020
945
1,020
1,100
1,200
Data
TWh
Data
Data
1985965
19901,073
1995841
1996828
1997813
1998809
1999832
2000863
2005995
20101,135
20151,315
20201,545
Chart
3864
1472
1033
889
588
580
577
546
383
328
US
China
Japan
Russia
Canada
Germany
India
France
UK
Brazil
Data
TWh
Data
Data
US3864
Chain1472
Japan1033
Russia889
Canada588
Germany580
India577
France546
UK383
Brazil328
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RAO UES of Russia Today: Operating Highlights
Source: RAO UES of Russia, IEA
The Worlds Ten Largest Electricity Companies (2003)
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Russian Electricity Sector: Todays StructureFederal Grid Company
System Operator32 Federal Power StationsGenerationTransmission & Distribution GridsSupplyDispatching Services Russian FederationMinorityShareholdersof the Parent CompanyRosEnergoAtomGovernment10 Nuclear Stations73 Regional Power Companies - AO-EnergosFrom 49% to 100%52%48%100%100%From 50 to 100%RAO UES of Russia
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RAO UES of Russia Today: Key Financial Data
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Growth of the market capitalisation of RAO UES of Russia (RTS data)440%420%400%380%360%340%320%300%280%260%240%220%200%180%160%140%120%100%80%Capitalisation of RAO UES of RussiaRTS Index08/06/200402/09/2002In the recent two years the stocks of RAO UES of Russia were largely outperforming the Russian securities market as a whole Adoption of a package of laws on electricity industry
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Power sector reform after adoption of a package of laws: restructuring of RAO UES of RussiaApproval of a configuration of Wholesale Generation Companies;Approval of a configuration of Territorial Generation Companies;Approval of a configuration of Interregional Distribution Companies and Interregional Transmission Companies;Approval of the corporate strategy concept (5+5); Ongoing consolidation of transmission and operational control assets (within AO Federal Grid Company and AO System Operator);Adoption of restructuring decisions by 17 AO-Energos. Restructuring of the first utility (Kalugaenergo) has been completed;Ongoing spin-off of repair and maintenance businesses;A management company for AO North-West CHPP (an international consortium involving ENEL and ESN Energo) has been chosen through a public tender procedure.Establishment of new market participants:
10 wholesale generation companies (WGCs),Up to 20 territorial generation companies (TGCs) 5 interregional distribution companies (IDCs);
! Sale of thermal WGCs and TGCs to private investors;Completion of the restructuring of AO-Energos: by the end of 2004, 40 AO-Energos will have held restructuring shareholders meetings);Completion of the consolidation of transmission and operational control assets;Attracting initernationally recognized strategic investors into the Russian power sector ResultsPlans
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Power sector reform after adoption of a package of laws: formation of the market
Since November 2003, electricity trading sessions have been going on in the competitive sector 5-15 Within the first 7 months of its operation, the trading exchange of the Non-Commercial Partnership ATS became one the ten largest specialized trading exchanges of the world by trading volumesThe free sector of the market represents some 8% of the total electricity generation and consumption in European Russia and UralsImplementation of the current model of the competitive wholesale electricity market throughout the Russian territory (with the exception of isolated power systems and the Far East) Development of a new target model of the marketEstablishment of regional liberalized retail market (subject to the elimination of the cross subsidisation practices)ResultsPlans
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Volume and price dynamics in the competitive sector of the wholesale marketSource: NP ATSPower sector reform: formation of the market
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Improvement of management
Corporate Center
Reform Management Center
Business Unit 1
Business Unit 2
Business Unit Grids
Business Unit Hydro Generation
Business UnitServiceSO-CDUHydro WGCs(4),Hydro Power Stationsunder constructionThermal WGCs(3),TGCs (8), CorrespondingRegional Energos
Thermal WGCs(3),TGCs (6),CorrespondingRegional Energos
Repair andService Companies
Management BoardThe new organizational structure of RAO UES of Russia must stimulate the reform progress in the electric power sector of RussiaFederal Grid Company,IDCs,Export-import,Foreign assets
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Participation in assets management,Export
In addition to the traditional exports, RAO UES of Russia has launched a new stage of its strategy abroad based on the acquisition of foreign assets. The company has acquired energy assets in Georgia and Armenia.
Expansion of the geographical scope of exports, attraction of investments into the export-oriented core business development projects.Participation in assets management or acquisition or foreign assets in the CIS area (Moldova, Ukraine, Kazakhstan, Kyrgyzstan,Tadjikistan) and foreign countries (Slovakia, Bulgaria, Poland, Romania, Turkey).ResultsPlansApproval of the key parameters of the Feasibility Study of synchronous interconnection by the European Commission.The Union for the Co-ordination of Transmission of Electricity (UCTE) has prepared draft Terms of Reference for the development of a Feasibility Study of the synchronization project.Synchronization of the electricity systems of Russia and European countries.
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OK, Mr. Chubais, I agree that a quality of your reform is more important than its terms But Time is money, isnt it?!RAO UES of Russia Restructuring: Terms and Quality
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RAO UES of Russia Restructuring: Wholesale Generation Companies (WGC)
Arrangement Projects for the first five Wholesale Generation Companies will be discussed at the RAO UESR Directors Board Meeting on25.06.2004
I stage: Wholesale Generation Companies are set up as 100 % daughter companies of RAO UES(based on the assets and stocks of federal power plants belonging to RAO UES)
July-August, 2004: setting up of Wholesale Generation Companies 1, 2, 4, 5, 6
2 stage: Auctions to sell out Wholesale Thermal Power Generation Companies
Auctioning mechanism should be approved by the Russian Government
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RAO UES of Russia Restructuring: Territorial Generation Companies (TGC)
Arrangement Projects for the first two Territorial Generation Companies will be discussed at the RAO UESR Directors Board Meeting on25.06.2004
April 2004: RAO UES Directors Board has endorsed the scheme of the Territorial Generation Companies being established on the basis of the rented generation equipment of AO-Energos.
Based on this scheme Territorial Generation Companies 9 and 14 will be set up.
It is planned that Territorial Generation Companies 9 and 14 will start operating since 01.01.2005.
Territorial Generation Companies 9 and 14 could be sold to investors after their formation has been completed (2006).
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25.06.2004: Time to make a choice
Setting up and further splitting off WGCs and TGCsthe biggest actors on the future electric power competitive market in RussiaBreach of time schedule of setting upelectric power competitive market in Russia
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