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STRATEGIC GUIDELINES AND PURPOSES OF DEVELOPMENT OF THE COMPANY
Taking into account the international profile of activity of INTER RAO UES and the main directions of foreign economic policy of the Russian Federation in the power industry, the following may be defined as the main preconditions determining the directions of development of the Company in international power markets:
- A necessity to preserve system reliability of power supply of the Russian Federation through maintenance of parallel operations of power systems of neighboring countries and the formation of border capacity reserves;
- A growing local electric power deficit in some countries of the European Union and, as consequence, an increase in volumes of trans-border electric power supplies;
- Launch of privatization processes in the power industry in countries with geographic locations important for export and import operations;
- Continuing liberalization of electric power markets in Russia and EU countries;
- Actualization of issues of energy security and environmental protection.
In February 2007 the Board of Directors of JSC RAO UES of Russia approved “Basic Provisions of CJSC INTER RAO UES Strategy”. Within this document the following target indicators of development to 2015 were approved:
- management of foreign and Russian generating assets with the total installed capacity at least 30,000 MW (at least 15,000 MW in ownership and at least 15,000 MW in asset management);
- value of business exceeding 14 billion US dollars by 2015.
The following are stated as conditions for implementation of priority directions of the development of the Company:
- maximization of profitability of export and import operations;
- increase of total profitability of Company activity;
- introduction of best practices of core asset management;
- increase of volume and quality of core services provided to customers in the markets where there is presence;
- raising profitability on invested capital measured against average weighted expenditures on capital;
- an increase in investment attractiveness of assets owned and managed by the Company;
- the attraction of foreign investors for implementation of investment programmes (projects) of the Company;
- reduced dependence in the financial indicators of the Company from trading activity due to an increase of the relative share of proceeds and EBITDA from asset management.
The strategic directions of development were reflected as well while defining criteria of selection of target power markets:
- potential to organize import of electric power from a country to Russia;
- possibility to occupy a considerable part of the market in this country;
- possibility to use positions in the market of this country for creation of competitive advantages for the Company in adjacent markets.
Taking into account the above selection criteria the target power markets of the Company may be grouped as follows:
- border regions in the territory of the Russian Federation;
- Baltic and Nordic countries;
- East European countries;
- Black Sea countries, Turkey and the Middle East;
- Central Asian countries;
- Far East countries (China, Korea, Mongolia) and South-East Asian countries;
- Latin American countries.
During 2008 activities complying with the basic strategic goals and objectives were consistently implemented.
As a result of the reorganization of JSC RAO UES of Russia the Company included the current generating assets: JSC Severo-Zapadnaya TETs, JSC Kaliningradskaya TETs-2, JSC Ivanovskiye PGU and JSC Sochinskaya TES. JSC INTER RAO UES became one of the largest Russian generating companies.
Issues of raising funds for the investment programme of the Company were solved efficiently. At a meeting of the Supervisory Council of State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” on April 4, 2008 it was acknowledged reasonable to provide target funding of the investment programme of JSC INTER RAO UES by way of granting credit resources and participation in the Charter Capital of the Company (25% + 1 share). The limit for funding (debt and share capital) was set at the amount of 50 billion rubles.
Activities to introduce JSC INTER RAO UES to the capital markets were carried out successfully. In May 2008 decisions were taken about inclusion of ordinary shares of JSC INTER RAO UES in the list of securities traded on the CJSC MICEX Stock Exchange and on the Russian Trading System (RTS) Stock Exchange. In July 2008 a programme of depositary receipts of JSC INTER RAO UES was opened (depositary bank – The Bank of New York Mellon).
VISION OF THE FUTURE OF THE COMPANY
By 2020 JSC INTER RAO UES plans to become a transnational electric power holding company among the ten largest global electric power companies, the main activity of which will be management of electric power assets in Russia and abroad. The Company management sees the following strategic objectives:
- efficient management of investment activity including acquisition of power assets in Russia and abroad and participation in construction of new power facilities;
- expansion of presence in target power markets;
- strategic partnership with leading power companies within the framework of implementation of investment programmes and transactions of acquisitions of assets as well as implementation of projects in the sphere of increase of power efficiency and power conservation.
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