Statement of the Management Board Chairman – General Director

Nikolay Shulginov

Nikolay Shulginov
Chairman of the Management Board – General Director, PJSC RusHydro

Dear Readers, Colleagues and Partners!

I’m happy to present to your attention the ninth Report on Corporate Social Responsibility of RusHydro Group. Our company is the largest energy holding in Russia, which comprises more than 410 facilities with the total capacity of 38.9 GW, it is one of the leading companies in domestic energy industry. Hydropower plants of JSC RusHydro provide most of Russian regions with renewable energy, while subsidiaries of RusHydro Group supply electricity and heat almost to the entire Far East.

2016 became a peak year for RusHydro in terms of main indicators. The electricity generation reached its maximum value for the whole history of the Group’s operation – 138.8 billion kWh. Despite the difficult economic situation, the volume of RusHydro revenue amounted to record 391 billion rubles, and the volume of paid dividends for 2016 amounted to unprecedented 19.9 billion rubles. In addition, we reduced the debt ratio by selling a number of non-core assets, optimized a number of expense items without compromising the stable operation of power plants.

In 2016, we worked to resolve the issue of arrears of the enterprises belonging to RAO ES of the East, and we adopted the optimal decision in early 2017 – to increase the authorized capital of the Company by 55 billion rubles. The funds raised were used to refinance current loan obligations of the Far East energy sector.

The past year was also marked with new RusHydro facilities commissioning. The second stage of Blagoveshchenskaya CHPP construction in the Far East was completed; Zelenchukskaya HPP-PSPP and Zaragizhskaya HPP in the North Caucasus were launched – all this helped to give a new impulse to these regions’ economic development. In addition, we are developing alternative energy sources: in 2016, three solar power plants were put into operation in Yakutia.

RusHydro continues to update obsolete capacities. Since 2011, we have been implementing the Integrated Modernization Program, according to which more than half of the main equipment should be replaced by 2025. Due to the Program activities, the Company’s capacity increased by 66.5 MW in 2016 and by 267 MW for five-year period, which is comparable to the launch of a new hydropower plant.

In July 2016, the new RusHydro Development Strategy was approved, which determined the main directions of the Company’s activities for the period up to 2020 with a perspective for up to 2025. Among the priorities there are reliable and uninterrupted operation of power facilities, construction of new facilities (primarily in the Far East), efficiency improvement by production and management processes optimization. We have set tasks of a large scale for ourselves. The construction of hydropower plants Nizhne-Bureyskaya and Ust-Srednekanskaya and thermal stations in Yakutsk, Sovetskaya Gavan, Vladivostok and Sakhalin are continuing.

One of the key aspects of the RusHydro’s activity is social responsibility: the HPP’s reservoirs are a source of water for household and drinking needs, which stimulate the development of agriculture and transport, while the Group’s enterprises are the largest employers in the regions. In 2016, the Company’s hydropower engineers supported considerably the regions of RusHydro presence in such essential spheres as the development of education, ecology and assistance to socially vulnerable groups. Last year, thanks to RusHydro, new eco-trails and educational sites appeared, children’s books were published and hundreds of thousands of rubles were collected for those who need help.

In 2016, we were the first to conduct public hearings on a non-financial report. These and other events brought fruitful results: in January 2017, PJSC RusHydro was included in the FTSE4GOOD Emerging Index, which unites emerging market companies – leaders in the field of sustainable development.

It should be pointed out that the RusHydro’s success in 2016 was achieved through the adoption of the right management decisions, professionalism of the employees of branches and subsidiaries, and business processes optimization. Therefore, I would like to thank the teams of plants, scientific and design institutes, subsidiaries and Executive Office for their work, and to address the words of special gratitude to the veterans of our industry, because thanks to their work and talent the domestic energy industry works like a charm and continues its development.

I am confident that in 2017 we will continue to improve the efficiency of generating facilities and the reliability of energy supply to consumers, contributing to the development of renewable energy and regional development.