Transcript Реформирование российской электроэнерг

RAO UES Reform:
The Final Stage
Table of Contents
RAO “UES of Russia” today
Reform: company transformation and market development
Conclusions
2
1. RAO “UES of Russia” today
RAO “UES of Russia” today
4th
Russia:
Largest Power Producer
in the world
TWh
5 000
3 993
4 000
3 000
1 640
2 000
1 088
1 000
889
601
597
567
555
384
345
Source: IEA
3.7%
Brazil
3.7%
UK
5.5%
France
Russia
Japan
6.8%
Germany
10.2%
India
24.9%
Canada
%
Of World
Total
China
US
0
3.5%
3.5%
2.4%
2.1%
4
RAO “UES of Russia” today
RAO “UES of Russia”
Leading role in Russia’s electricity industry
4%
28%
32%
72%
Installed capacity
RAO: 156m kW
96%
68%
Heat generation
RAO: 469m Gcal
RAO “UES of Russia”
Length of transmission lines
RAO: 2,497 thousand km
Other
5
RAO “UES of Russia” today
RAO “UES Russia”
1999 - 2004 RAO “UES of Russia” financial performance
US$m
21,000
20,141
25.0%
19,000
16,349
17,000
15,840
15,000
17.6%
21.0%
20.2%
20.0%
17.8%
13,273
13,000
15.0%
10,508
11,000
9,000
14.1%
8,015
10.0%
7,000
4,235
5,000
3,000
1,000
5.1%
1,853
406
(1,000)
3,309
2,819
1,876
1,383
1,101
916
18
5.0%
483
0.0%
(365)
1999
2000
Source: IAS Group financial results
(1) Excludes doubtful debtors expense
(2) As reported
Revenues
2001
2002
(1)
EBITDA
2003
(2)
Net Income
9M 2004
EBITDA Margin
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RAO “UES of Russia”
Share price dynamics
RAO “UES of Russia” today
US cents
40
30
124.1%
87.5%
20
10
0
1.04.2003
UES
RTS Rebased
3.06.2005
During the last two years shares of RAO “UES of Russia”
outperformed broader RTS index by 37%
7
RAO “UES of Russia” today
RAO “UES of Russia”
Relative valuation
2005 EV/EBITDA
EV/Installed capacity, $/kW
2,000 1,942
10.0x
1,800
7.1x
7.1x
1,631
1,600
7.0x
1,400
6.3x
5.1x
Average: 5.8x
4.0x
4.0x
1,200
$/kW
6.0x
3.7x
1,287
1,003
1,000
Average: 984$/kW
800
600
2.0x
478
410
400
134
200
Sources: Brokers’ Estimates, Bloomberg, companies reporting
Electrobras
Cemig
CEZ
Endesa
E.On
Enel
Electrobras
Cemig
Enel
CEZ
E.On
Endesa
RAO UES
0
0.0x
RAO UES
8.0x
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2. Reform: company transformation and market
development
Finish is in sight
FINISH
2007
2006
2005
10
RAO “UES of Russia”
Company transformation
and market development
Reform basics
Reform Basics: Separation of Monopoly and Competitive Sectors
Competitive
sectors
 Generation
 Sales
Monopolies
 Transmission
 Distribution
 Dispatching
 Free price-setting
 Stimulating
market entry
 Securing equal
access to grids
 Establishing market
infrastructure
Market
rules
Regulated
tariffs
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Legislative base of reforms:
Company transformation
and market development
Key legislation, 2001-2004
July 2001 –
Government
Decree №526
«On reform of
Russia’s
power sector»
March 2003:
Five laws on power
sector reform signed
by President Putin
and entered into
force (main– №35-FZ
«On the power sector»)
Governmental
decrees
and
orders
December 2004:
Meeting of
Russian
government.
Key decision
made:
preparation
for the unbundling
of
RAO «UES
of Russia»
to be
completed
in 2006
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Company transformation
and market development
Pre-reform Sector Structure
RosEnergoAtom
Russian
Federation
10 Nuclear
Plants
Minority
Shareholders
of the Parent Company
52%
Independent
Regional
Energos:
48%
Irkutskenergo
Tatenergo
RAO UES
73 Regional Energos
Generation
Transmission
&
Distribution
Grids
Sales
Bashkirenergo
High
Voltage
Central
Grid
Dispatch
+
Grid
Service
32
Federal
Power
Plants
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Company transformation
and market development
Target sector model
Monopolies
Competitive Generation
Private shareholders
<25%
<25%
System
operator
FGC
51-60%
<48%
Government
Wholesale
GenCos (6)
(Transmission)
>75%
>75%
49-40%
<48%
IDC
(Distribution) (4)
>52%
Competitive
market
75-85%
Territorial
Hydro
GenCo (1)
GenCos
(14)
>52%
25-15%
Other generating companies
On the base of independent
Regional Energos
Nuclear power generating company
FGC – Federal Grid Company
IDC – Inter-regional distribution grid company
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Company transformation
and market development
Formation of new generation companies
Regional Energos
Generation Assets
(Regional GenCos)
Federal Power Plants
Other assets: Grid,
Dispatch, Sales, etc.
Territorial
GenCos
• Capacity ranges from 0.6 GW to 10.5 GW
• Annual sales ranges from US$100m to
US$1300m
10 of 14 registered
Target Private Shareholder Stake: >50%
Wholesale
GenCos
• Average capacity at 9 GW
• Average annual sales at
US$600m
HydroGenCo
•Capacity of 22 GW
•Annual sales at US$700m
6 of 6 registered
Registered
Target Government Stake: >50%
• Unbundling completed and Regional GenCos registered in 35 regions
• Unbundling continues in 25 regions
* Some of the assets contributed from Regional Energos
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Company transformation
and market development
Market Progression
Fully Regulated Market
(prior to Nov 2003)
Status Quo
(Nov 2003 – 2005)
Regulated Market
Regulated Market
 List of participants (buyers
 List of
participants
(buyers and
sellers)
established by the
government
 Regulator or RAO
and sellers) established by the
government
 Regulator or RAO UES
matches buyers and sellers
 Tariffs are regulated
UES matches
buyers and
sellers
 Tariffs are
Transition Market
(2006 - 2008)
Vesting Contracts
Free Market
(from 2009)
Competitive Market
 Regulated bi-lateral
(vesting) contracts
introduced (for the next
3-5 years)
 Initial electricity volume
of 85% of total electricity
volumes and decreasing
 Full
liberalization
Competitive Market (≥15%)
(Spot)
regulated
 Voluntary for
Competitive Market (5 – 15%)
 Free market segment trading
5 – 15% of electricity
volumes
generators and
purchasers
 No price cap
 Self regulating trading floor -
ATS
 Price cap set by the
Regulated Market
Regulated Market
Free market
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Company transformation
and market development
The Reform Process
Finishing line in sight
2005
Competitive
Market (5 – 15%)
2006
2007
2008
Launch of vesting contracts and competitive market (spot)
Private majority Wholesale GenCos
Wholesale GenCos Formation
Territorial GenCos Formation
Private majority Territorial GenCos
RAO UES unbundling
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3. Conclusions
Conclusions
Investing in Russian Power Sector: Investment
Vehicles and Timing
Vehicles


Pros
Cons
Currently/During Transition (2005-2006)
Post RAO UES Unbundling (2007-2008)
RAO UES/Regional GenCos/ Federal Plants
Wholesale and Territorial GenCos
Pro-rata distribution among shareholders
brings about transparency and fairness
Entry point into concrete Wholesale
and/or Territorial GenCos along defined
and transparent route

Substantial future valuation upside

Relatively smaller and less liquid entities

Valuation risk due to lack of market
signals



Valuation parameters
more certain since
market signals are in
place
Ownership/control
profile of government
or industrial group
clarified
Valuation upside likely
to be lower than
through earlier
investments
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Conclusions
Reform’s final stage: Lower risk investment
Potential Investor Concerns




No Government willingness/commitment to
support the company transformation
No willingness of the Government to exit
generation and consolidate control over
monopolies business (FGC, SO, Hydro GenCo)
No transparency/fairness of corporate procedures
during the restructuring
No Government commitment to the electricity
market liberalization
Do We Share?
No
Partially
No
Partially
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Conclusions
Reform of RAO “UES Russia”
On a Corporate Mission…
RAO “UES of Russia” is committed to…
 … ensure a sustained GROWTH OF THE VALUE of its
shares and the shares of the companies that will be
established in the course of restructuring
through a successful
implementation of the reform…
… and increased efficiency and transparency
of its operations as well as the operations of
the companies established in the
restructuring process
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Conclusions
Russian Power Sector:
Key advantage for investors
Today, electric power assets are deep
in the non-market environment ...
… By the end of 2006 they will be available
amid competitive market conditions.
2005-2006:
From the swamp to the firm ground
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