Enel's Efficiency Grows in Russia

Published on Tuesday, 12 May 2015

Operational and management optimisation, plant efficiency increase, investments and costs are Enel Russia's growth drivers for 2019 that will allow the Group company to respond to the recent unfavourable backdrop and increase EBITDA from the 14.6 billion rubles expected for 2015 to the 25.1 billion rubles that are planned for 2019.

"The ability to adjust to the rapid evolution of the global and domestic scenario, supported by a rigorous cost-efficiency control, is essential for any commercial activity's success", said Carlo Palasciano, who was appointed General Manager of Enel Russia in March. Regarding the coming five-year period he underlined that "Enel Russia will continue to build on these abilities by implementing a number of initiatives that will allow us to face this year's challenges and keep on growing starting from 2016".

The volubility of the Russian economic scenario is currently characterised by exchange rate volatility, high inflation affecting the price of coal and fixed costs and finally tariff containment as prescribed by the government. Additional factors are regulatory framework instability and the evolution of the electricity generation market by means of new gas-fuelled plants.

Enel Russia has a net installed capacity of 9,107 MW from four thermal electric facilities that operate in the area of the Urals (Reftinskaya GRES, Sredneuralskaya GRES), northern Caucasus (Nevinnomysskaya GRES) and the central region (Konakovskaya GRES). These plants also provide heating to industries and homes thanks to a local energy distribution network.

In the first quarter of 2015 Enel Russia's net power output stood at 10,807 GWh, 1.6% higher than the figure posted in the same period of the previous year.

Enel Russia'spriorities for 2015-2019, as presented at the latest Investor Day, are the following four:

  • cost optimisation for all kinds of expenses;
  • strong focus on the reliability of cash-generating equipment;
  • efficient management of fuel suppliers portfolio;
  • stable dividend distribution to shareholders

 

The business plan investment programme has been improved compared to the previous one, in order to increase flexibility and portfolio streamlining, taking into account the current pricing environment. Capex for the 2015-2019 period amount to 42.3 billion rubles, of which 49 percent for maintenance and efficiency growth and 47 percent to continue improving plant environmental performance as the company has already been doing for a number of years. The revision of capital expenditures as well as other optimisation activities under the 2015-2019 business plan will support the company's positive free cash flow under the current challenging market scenario.