Competitive capacity offtake results require GEH to cut investment - CEO
MOSCOW. Nov 12 (Interfax) - The results of the competitive capacity offtake for 2016 will lead to the reduction of the investment and repair programs of generating companies that are part of Gazprom Energoholding (GEH), GEH chief executive Denis Fyodorov told reporters on the sidelines of the Russian Power conference.
"The issue is that the competitive capacity offtake took place at the low price, which is extremely negative against the backdrop of inflation in the country, the signs of crisis taking place. We are seeing a decrease in prices for capacity, which will automatically lead to the reduction of repair programs, reduction of investment programs next year, both in physical and financial terms," Fyodorov said.
"This is the only sector where there is deflation," Fyodorov said, remarking that this raises the question for regulators of "why was it necessary to set [the price for competitive capacity offtake] at the low price."
GEH has not yet confirmed the investment programs of the companies it controls. They are now being reviewed.
The day-ahead market is also unprofitable for generating companies, Fyodorov said. If the situation continues as it is going, OGK-2 alone might post a loss of 3 billion to 5 billion rubles on the day-ahead market in 2016.
However, even in these circumstances "there will be dividend payments in any case," Fyodorov said.