Russian govt mulls suspending RusHydro dividends until 2028 to improve co's finances - paper
MOSCOW. Feb 11 (Interfax) - The Russian government is discussing imposing a moratorium on dividend payments by RusHydro until 2028 as a way to stabilize the power company's financial health, national daily Kommersant, citing sources, reported on Tuesday.
It proposes to use the money instead to pay off RusHydro subsidiary Far East Generating Company's (DGK) debt incurred to refinance loans, and to finance RusHydro's investment program.
The economic effect of this measure is estimated at 125 billion-150 billion rubles, the paper's sources said.
Possible measures to support the company also include accelerating the liberalization of electricity prices in the Far East, which was included in the second price zone of the wholesale energy market (Siberia) as of January 1, 2025, Kommersant reported.
The government is considering increasing the amount of Far East hydropower plants' electricity and capacity that is sold at market prices from 2.5% to 100% as early as July 1, 2025, while maintaining regulated rates for households. It also proposes to move up the date for the unification of the Siberia and Eastern price zones from December 31, 2028 to July 1, 2025; at present, trading takes place separately for each zone, without taking into account power flows and weighted average prices.
This measure would additionally increase end prices by 4% and the effect of its implementation would total 185 billion rubles in the period of 2025-2029, the paper said.
There are also proposals to reschedule capital-intensive projects in RusHydro's investment program; additionally index prices for price zone competitive capacity offtake for 2025-2026; use "project financing factory" instruments to build thermal power plants in the Far East; and compensate the company's fuel costs by factoring them into the regulated price for electricity and capacity.
Deputy Prime Minister Yury Trutnev told reporters earlier that the government and RusHydro management were preparing proposals to improve the company's finances. "RusHydro's main problem is that it pays for coal at the market price, but keeps rates in the regulated sector. Economics don't work like this," he said.
"I don't know if there will be dividends or not. But can dividends be used as one way to improve the situation? They can," Trutnev said when asked about potential RusHydro payments to shareholders.
RusHydro's debt stood at an estimated 466.99 billion rubles at the end of the first nine months of 2024. The company characterized its debt burden as moderately balanced, with a net debt to EBITDA ratio of 3.3 at the end of the period.
Meanwhile, company shareholders have still not made a decision on dividend payments for 2023. "I believe that paying dividends given the current cost of borrowing is a fairly difficult issue," RusHydro CEO Viktor Khmarin told Interfax last fall, stressing that this is ultimately up to the company's principal shareholder, the Russian government.
RusHydro has more than 60 hydropower plants in Russia, thermal power plants and power grid infrastructure in the country's Far East, as well as power supply companies and research and engineering institutes. The company's power plants, including the Boguchany HPP, have installed capacity of 38.5 GW.
RusHydro's principal shareholder as of the end of September 2023 was the Federal Property Agency with 62.2%. State bank VTB owned 12.37% and En+ Group held 9.61%.
RusHydro shares dropped 6.3% to 0.5321 rubles at the start of trading on the Moscow Exchange Tuesday on rumors that the Russian government is discussing imposing a moratorium on dividend payments by the power company until 2028.