The Issuer is the largest hydropower company in Russia. The Issuer believes that the possible decline in the
Issuer’s industry, adverse changes in the operation, and production process, construction of own power supply
facilities by large consumers may affect the Issuer but shall not substantially affect fulfilment of its obligations under
securities.
2.4.2. Country and Regional Risks
Risks inherent in the political and economic situation in a country (countries) and region, where the
Issuer is registered as a taxpayer and/or performs its primary activity, provided that primary activity of the
Issuer in such a country (region) brings 10 and more per cent of income for the last complete reporting period
preceding the securities prospectus approval date.
Country Risks
The economy of the Russian Federation has no protection against market recessions or a slowdown in global
economic development. The volume decrease of foreign investments in the Russian economy and vulnerability of the
Russian economy for changes in international prices for energy products may lead to vital limitation of the
Company's access to capital and adversely affect the purchasing ability of the Company's consumers
Furthermore, due to the world financial market crisis and a slump in industrial production, there is a risk of a
drop in demand for power, which may lead to a reduction in sales volumes and in the Issuer's proceeds, as well as a
risk of accounts receivable growth due to non-payment by power consumers.
Exposure to country risk may be indirectly assessed by credit rating with some assumptions (without political
risks for business). According to the international rating agency Standard & Poor's the long-term credit rating of the
Russian Federation on foreign currency liabilities is maintained at "BB +". At the same time the forecast of long-term
credit rating of the Russian Federation has been revised by S&P on 16.09.2016 from negative to stable. According to
analysts, the external risks for the Russian Federation decreased, the Russian economy is adapted to low world market
prices for raw materials. The downgrade can occur if geopolitical developments will lead to a tightening of sanctions
foreign states against the Russian Federation.
Political Risks
Due to the tightening of control on the part of energy sector regulatory agencies, the Issuer is taking steps
necessary to avoid a detrimental effect of the above-mentioned risks on its activity. In particular, key attention is paid
to ensuring transparency and reliability of control procedures for expenditure of budgetary funds under
implementation of the Issuer’s investment program, as well as implementation of risk management measures, as
described in this section.
Regional Risks
The Issuer is registered as a taxpayer in Krasnoyarsk Krai, but productive assets and the operations themselves
are carried out in many regions of the Russian Federation. In this respect it is possible to define specific risk in two
regions: risks inherent in potential terrorist activity are a burning problem for the North Caucasus, and the Far East is
characterized by earthquake activity and the inaccessibility of certain areas. Measures are being taken in respect of
these risks and they are described in the following two sections. The risk on the whole is assessed as insignificant.
Assumed actions of the Issuer in the event of an adverse effect of changes in the situation in the country
(countries) and the region (regions) on its activities.
In the event of a significant restriction of access to the capital of the Issuer, the Issuer plans to carry out all
actions aimed at reducing the impact of such events on their activities, by optimizing the use of leverage.
In order to diversify the country risk is developing cooperation with both European and Asian, and Latin
American partners in accordance with previously signed inter-company agreements.
It is also worth noting the growing volume of interaction of the Russian Federation with partners in the SCO
and BRICS, the establishment of new financial institutions and the arrival to the country capital data partners that
influence country risk in the direction of its decline.In order to ensure maximum transparency of expenditure of
budgetary funds allocated by the state for the development of power industry of the Far East, PJSC RusHydro has
formed a mechanism to Ministry of Economic Development, Ministry of Energy and the Accounts Chamber of the
Russian Federation continuously assess and analyse the progress of the project, check the effectiveness of capital
investments and monitor targeted use of funds. Transparent use of funds allows the PJSC Sberbank through a system
of separate bank accounts, which are opened for each participant of the building. Independent of price and technology
audit of design and estimate documentation for each project are carried out by engineering companies, selected by
OJSC Sberbank on a competitive basis. For more information on the parameters of the target budget spending control
system can be found in a special section of the RusHydro site "Development of the Far East Energy" at
http://www.rushydro.ru/activity/razvitie_energetiki_dalnego_vostoka/
Changes in the situation in the country and regions of the Issuer's activities, the nature and frequency of such
changes, and risks inherent thereto are difficult to predict, as it is the case with their effect on the future activities of
the Issuer. Most of these risks are beyond the control of the Issuer due to their global scale. In case of disruption in
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