Management Association (FERMA). In June, 2015 within the framework of the 13th International professional forum
"Risk Management in Russia and CIS" program RusHydro risk management has become a winner of the annual
competition "Best Risk Management 2015" in the category "Production organization". In November 2015 the
Company participated in the KPMG study, "The practice of risk management in Russia: strengths and areas for
development."
Results
of
the
study
are
presented
under
the
link
https://assets.kpmg.com/content/dam/kpmg/pdf/2015/11/S_CG_10r.pdf.
.
As
it
was
demonstrated by this study many of the best practices of corporate risk management are assessed on major Russian
companies and are used in PJSC RusHydro (the integration of risk management in the company's development
strategy, the collection and accumulation of statistical data, the interaction between departments, the involvement and
active participation of key stakeholders as well as improving quality of information on key risks.
By the Decision of the Management Board of the Company dated November 28, 2014, No. 884, the Development
Program for Corporate Internal Control and the Risk Management System of RusHydro Group was approved.
The Issuer's activity with regard to risk management is connected with the need to reconstruct operating and
construct new generating facilities, including:
Improving reliability, safety, and cost effectiveness of the equipment by regenerating worn main and auxiliary
equipment;
Increase of technical-and-economic characteristics of HPP for operation on the competitive electrical energy
market, and reduce repair expenses, improving operational efficiency by implementing programs to reduce
production costs and economy;
Increase in operating performance through implementation of a program to reduce operating costs and make
savings;
Targeted financial policy;
Continuous analysis of electric energy market conditions;
Competitive environment in procurement, works, and services.
The Issuer's risk management policy:
The Issuer's risk management policy implies timely recognition and prevention of possible risks in order to
minimize losses. In October, 2015 the Audit Committee of PJSC RusHydro approved "POLICY in the area of
internal control and risk management of PJSC RusHydro in the new version, which was approved by the Board of
Directors of PJSC RusHydro (protocol number 227 16/11/2015). The Issuer's activities within specific risks
management are described in Clauses 2.4.1.―2.4.7. below.
2.4.1. Industry Risks
Influence of possible decline in the Issuer’s industry on its activities and fulfilment of the obligations under
securities. Major possible changes in the sector according to the Issuer (separately in domestic and foreign markets),
as well as prospective actions of the Issuer in these circumstances:
Foreign market:
The Issuer is exposed to comparatively moderate external industry risks. According to Moody's international
rating agency, annual default frequency in the electricity sector for the last 10 years didn’t exceed 7,3% (see Moody’s
Investors Service, Special comment: Annual Default Study: Corporate Default and Recovery Rates, 1920–2015).
In 2016 PJSC RusHydro took 127 position (compared to 137 in 2015) in the ranking of 250 leading energy
companies of the world according to Platts (2016 Platts Top 250 Global Energy Company Rankings). 2016 While
composing the ranking, the financial performance of public enterprises of the energy sector with total assets of more
than 5 billion US dollars is used.
Assessment is based on the following financial metrics: asset value, revenues, profits and return on invested
capital for the last fiscal year.
Domestic market:
The Issuer is exposed to industry risks mainly due to the possible changes in the electric power industry.
On the one hand, it is to be noted that decrease in uncertainty of work of the Issuer on the wholesale market power
associated with the transition in 2015 on a long-term model for competitive selection of power required by Rules of
the wholesale electricity and capacity market (Approved by regulation of the Government of the Russian Federation
No. 1172 dated December 27, 2010). As a result of competitive selection of power held in 2015-2016 the price of
power for the period to 2020 (inclusive) was defined. The increase predictability of prices for future periods reduces
the level of industry risk.
At the same time as part of the continuing reforming of the energetics, the norms governing the Russian power
market, as well as the norms applied to market liberalization, specification of power tariffs, functioning of the
capacity market, and relationships between power manufacturers and consumers are subject constant changes. Since
the official beginning of the reformation in July 2001, the implementation term of the reformation stages and the
scope of these stages have changed several times.
As part of the risk management industry Issuer undertakes the necessary measures to create a favourable legal
framework for electricity and capacity market for the Issuer. To realize this goal, the Issuer is involved as an expert in
the process of drafting legal acts in the field of electricity at the sites of the Ministry of Energy, the Association "NP
Market Council" and the Federal Antimonopoly Service.
Along with the existing risks inherent to the Russian electric power and capacity market, a large number of
operational, commercial, engineering, management, regulatory, and other risks may arise, which are difficult or
impossible to foresee at present and which are outside the control of the Issuer. Such changes and associated
uncertainty may have a material, adverse effect on the Issuer’s business activity, its income, and results of its
operations.
The Issuer is exposed to the competitive expansion risk on the retail market due to activation of power supply
companies aspiring to render services to large consumers. In order to manage that risk, the Issuer is focused on the
work with the customer base. Measures on risk elimination connected with loss of consumers:
- Individual relationship building with large consumers
- Promotion of the company on key consumer markets
- Transfer to new relations with consumers: increase of consumer services, considering needs and expectations
of customers, and with strict observance of obligations
- Continued status of guaranteeing supplier for concentration of the customer base and reduction of costs per
energy unit by trade companies of the Issuer.
According to the Issuer’s assessment, the decline in the industry may be associated with the following risk
groups:
1. Operational (production) risks related to wear and tear, infringement of operational conditions, and critical
changes in equipment working conditions. Realization of such risks may result in equipment breakdown (emergency
cases) and destruction of facilities. Systematic emergencies may result in power system separation, rolling blackouts
of consumers, and operation of capital equipment under critical conditions.
Hydroelectric power plants are essential for provision of the required quality of power supply covering uneven
sections of daily load curves and being a short term operative and emergency power reserve.
Unsatisfactory equipment conditions due to its wear and tear are one of the central causes of operational risks,
which are, but are not limited to:
• Decrease in the operational and economic indicators of HPP
• Risk of emergency resulting in a lack of electric power and grave environmental and social consequences
• Operation of engineering devices at hazardous production facilities (operation of pressurized lifting
installations and equipment) of the branches and PJSC RusHydro beyond the normative period that significantly
increases the risk of emergency and accidents occurring at hazardous production facilities
• Risk of personnel injury and death
Besides, the Issuer's equipment is to a significant extent exposed to natural disasters, malfunction, etc. These
factors may cause decrease the reliability of equipment, enhance the likelihood of failure and increase maintenance
costs.
Action plan for management of these risks:
Industrial operational risk management of PJSC RusHydro branches forms the basis for decision making on
technical and engineering issues by the Issuer when planning equipment technical influence programs (within
prospective technical reconstruction and modernization, repair, and maintenance program).
To manage the risks related to production assets’ reliability more effectively, PJSC RusHydro actively
implements various methods of risk management, including implementation of technical policy requirements.
The probability of equipment failure is assessed as standing referring industry average. All the Issuer’s main
production facilities are insured. In addition, a set of measures is implemented to ensure the reliability of the
equipment and facilities at the adequate level, i.e.:
• planned repair works are carried out in full extent;
• The Technical Policy, approved by the Board of Directors (Minutes No. 133 dated September 05, 2011), is
applied in the Company, and it is based on the principle of achieving of the Company's strategic aims, integrated
management of the Issuer's engineering system, transparency, and economic feasibility of adopted engineering
decisions. In 2011, the Board of Directors approved the Comprehensive Modernization Program (hereinafter CMP)
for Generating Facilities for 2012–2025. The aim thereof is to maintain the long-term reliability and safety of
generating facilities of PJSC RusHydro in the long run. In 2016 the capacity gain due to PTP realization was 66, 5
MW. Modernization of the equipment is accompanied by improvement of operational and environmental
performance. The new turbines and generators, designed and manufactured in accordance with the current level of
power engineering, have a higher efficiency, longer run and require lower repair costs, more reliable and secure..
• Modern diagnostics methods without equipment shutdown are implemented.
• The structure and volumes of spare parts optimized.
Dostları ilə paylaş: |