Transcript Реформирование российской электроэнерг

2008 Reform Completion:
Unlocking shareholder value
RAO UES
Anatoly Chubais, CEO
UBS Annual Conference
November 15, 2007
1
Disclaimer
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2
Reform
Two final chords of the reform
Federal Law No. 250
(November 4, 2007)
UES Extraordinary General Meeting
(October 26, 2007)
RAO UES EGM approved
the final reorganization
(more than 95.43% of the attending
shareholders voted for).
Deadline for reorganization:
UES ownership unbundling by July 1, 2008.
UES shareholders will receive shares
in all target companies
on a pro rata basis
Coordinated
Agreed
Synchronized
Federal Law No. 250
to adjust power sector laws
in connection with
RAO UES reorganization.
Transitional period
of the power sector reform
will end by July 1, 2008
(date of completion of the RAO UES
reorganization).
Corporate and legal actions taken according to the plan
3
Reform
Competitive and Monopolistic Sectors:
Target Structure Companies
Competitive
sectors
• Thermal Wholesale GenCos (OGKs)
• HydroOGK
• Territorial GenCos (TGKs)
Monopolistic
sectors
• INTER RAO
• Federal Grid Company (FGC)
• System Operator
• Interregional Distribution Companies (IDC Holding)
• Energy Systems of the Far East
4
Power Sector:
Functional, Legal and Ownership Unbundling
Reform
The issue is not settled yet for the majority of EU countries:
Ownership unbundling of VICs and spin-off of distribution grids
??
EU countries
Functional unbundling
Legal unbundling
Ownership unbundling
July 1,
2008
Russia
Deadline for ownership unbundling of RAO UES (Federal
Law No. 250, November 4, 2007)
5
Reform
Funds raised
From share placements and competitive sales to strategic investors
7
5,848
6
USD in billions
5
4
3,087
2,867
3
2,345
2
1,647
1,52
0,996
0,946
1
0,451
0,459
0
Nov 06
Mar 06
May 07
May 07
Jun 07
Sep 07
Sep 07
Sep 07
Oct 07
Oct 07
OGK-5
OGK-3
TGK-5
TGK-3
OGK-5
OGK-3
OGK-4
TGK-1
OGK-2
TGK-8
Total: > $20 bn (average price: ~$581 /kW)
+ Other OGKs/TGKs planned share placements and competitive sales:
~ $20 billion by April 2008
6
Reform
Schedule:
OGKs/TGKs Share Placements and Competitive Sales
2007
Nov 07
2008
Dec 07
Jan 08
Feb 08
Stake offered, %
Mar 08
Apr 08
55%
TGK-9
TGK-12
34%
TGK-4
56%
68%
OGK-1
TGK-2
50%
TGK-6
52%
TGK-7
47%
TGK-13
32%
TGK-11
53%
TGK-10
76%
TGK-3
(LSE)
25%
TGK-14
Nov 07
Dec 07
Jan 08
Feb 08
Mar 08
34%
Apr 08
Schedule for placing additional shares in OGK-6 to be specified
7
Government maintains control
over transmission, hydro generation…
HydroOGK and FGC: Consolidation timeline
Minorities
~ 22%
Conversion ratios
approved
(valuation of all
hydro plants &
HydroOGK
August 2007
Minorities
<49%
UES
~ 78%
Transfer to a single share
(swap of shares and merger)
January 2008
Reform
Starts trading
on a stock
market
March 2008
State
>51%
Spin-off from UES
July 2008
HydroOGK
FGC
August 2007
July 2008
Conversion
ratios approved
(valuation of all
RTC & FGC)
Transfer to a single share
(merger of RTCs and spin-off)
Minorities <24%
Aug
2008
Starts
trading
on a stock
market
State >76%
8
Reform
…and distribution
IDCs: Consolidation timeline
• New configuration of IDCs: 11 companies + Far East Distrbution Co
Conversion
ratios approved
(valuation of
RDCs)
October 2007
Transfer
to a single share:
EGMs – merger of
RDCs and IDCs, swap
of shares
February 2008
Consolidation
is completed
April 2008
IDCs start
trading
on a stock
market
June 2008
9
UES reorganization
Redemption Issues
30 days
45 days
26 Oct
Price, $US
10 Dec
10 Jan
Ordinary share market price
Ordinary share redemption
price
13.11.07
16.10.07
18.09.07
21.08.07
24.07.07
26.06.07
Repayment period
29.05.07
Redemption period
1 April 2007
01.05.07
End of
redemption
period
EGM on
reorganisation
Valuation Date
03.04.07
Based on the independent valuation by Deloitte
1st of April 2007 following redemption prices
been approved by UES BoD:
 32.15 RUB ($ 1.23) for one ordinary share
 29.44 RUB ($ 1.13) for one preferred share
06.03.07

1,6
1,5
1,4
1,3
as of
1,2
have
1,1
1
0,9
0,8
0,7
0,6
0,5
End of
0,4
repayment
0,3
period
06.02.07
Shareholders of UES who vote ‘against’ or do not
vote on the reorganization can request UES to
redeem shares1
09.01.07

Preferred share market rpice
Preferred share redemption
price
(1)According to the Federal Law “About Joint Stock Companies” redemption amount is limited by 10% of UES NAV
10
UES reorganization
Unlocking the value through unbundling
($bn net to RAO UES)
3
1
12
1
8
13
79
20
53
21
Current
market
cap.
TGK
OGK
Miscellaneous Supply Distr'n Inter Federal Hydro Thermal
RAO
assets
RAO Grid Co. GenCo GenCos
Sum
Of Parts
Source: broker reports, Bloomberg. Market data as of November 8, 2007
¹ As per RAO 2006 full year consolidated IFRS financials
11
UES reorganization
Target Structure Companies:
Liquidity guaranties
At the moment of distribution to UES shareholders all of the spinning off Target structure companies
will be listed locally and will have GDRs
(exceptions: IDC Holding и Far East Energy Systems – as to be created just at the moment of spinning off from UES)
IDC Holding
Local
listing
TGK-11
Jan 08
Issuing
GDRs
Mar 08
HydroOGK
All thermal OGKs/TGKs
Jun 08
July 08
Aug 08
Sochinskaya
TES
(INTER RAO)
FGC
Sochinskaya
TES
(INTER RAO)
HydroOGK
Feb 08
FGC
Energy
Systems
ot the
Far East
Apr 08
May 08
Sept 08
IDC Holding
Energy
Systems
ot the
Far East
12
Markets
Competitive wholesale market:
Supply/Demand Equation Prices
Average prices (Europe+Urals and Siberia), Rb/MWh
700
600
Week and month
Day (Apr 07)
600
500
500
400
400
300
200
300
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
200
01.10.07
08.10.07
15.10.07
22.10.07
29.10.07
800
700
Year
600
500
400
300
200
Sept06 Oct06 Nov06 Dec06 Jan07 Feb07 Mar07 Apr07 May07 Jun07 Jul07 Aug07 Sept07 Oct07
Source: Administrator of Trade System (ATS)
13
Markets
Power Market Development
Pace of liberalization: government’s plan and actual progress
100%
~90%
actual pace of liberalization (facts and estimates)
mandatory increase of the liberalized market share
80%
~70%
Excluding
electricity consumption by households
60%
~60%
~40%
40%
60%
50%
~35%
~18%
20%
80%
100%
100%
~19%
(Sept 06)
(Sept 07)
~ 25%
25%
30%
15%
10%
5%
0%
0%
Sept 1, 2006 Jan 1, 2007 Jul 1, 2007 Jan 1, 2008 Jul 1, 2008 Jan 1, 2009 Jul 1, 2009 Jan 1, 2010 Jul 1, 2010 Jan 1, 2011

All new capacity and consumption commissioned after 2007 go to the free market
14
Markets
Power market model:
Electricity, capacity and ancillary services markets
Target model – competitive market
electricity
Transition market model
competitive
Regulated bilateral
contracts
5-15 %
per year
2011 – 100%
Day-ahead market
(auction)
Day-ahead market
capacity
Regulated bilateral contracts
capacity
Move to the capacity
payments market
ancillary services
Ancillary services tariff
Capacity payments
market
ancillary services
Move to the ancillary
services market
competitive
regulated
Free bilateral
contracts
Annual mandatory decrease
of regulated contracts
and corresponding increase in trading by
competitive prices
competitive
regulated
electricity
Ancillary services market
15
Investments
Electricity demand growth outlook:
Mid-term and long-term view
5,6%
6
5,3%
5%
5%
3,9%
3,7%
4
2
0
2006-2010
Basic scenario
2010-2015
2015-2020
Optimistic scenario
Source: Ministry of Industry and Energy (Minpromenergo); UES estimates
16
Investments
2006-2010
RAO UES Capacity Commissioning Program
MW
Thermal generation
OGKs, TGKs, RAO UES
2010
2006-2010
2 050
5 788
14 364
24 934
690
420
1 224
1 612
4 013
2 235
2 470
7 089
15 919
28 947
2007
1 186
1 545
67
1 253
Hydro OGK
Total commissioning
2009
2006
2008
20,000
15,000
MW
10,000
5,000
0
2006
2007
2008
2009
2010
17
Investments
2006-2010
Sources of financing
$ bn
~33.6 (24%)
~41.8 (31%)
~33.4 (24%)
~22 (16%)
~7
(5%)
Total: $137.8 bn
Private investments
Credits and loans
State budget financing
Companies’ funds
Other
18
New Investors, New Generation
New Opportunities
19