Annual report – 2008
Dear Shareholders, Colleagues and Partners, We present you the Report of Kyivenergo JSC for 2008. Notwithstanding the difficulties that existed last year in the whole chain of relations between the supplier and the consumer in the sphere of energy Kyivenergo man- aged to provide the capital of Ukraine with heat and electric power. We are proud of it and treasure it un- derstanding that a firm position of the Company on the market is a guarantee of the professional success and prosperity in the future. All systemic problems that had accumulated for years in the field showed themselves vigorously in 2008 and Kyivenergo had to operate on the brink of its techni- cal possibilities. We both managed to preserve a sta- ble operation of the Company and to ensure maximum payments in extremely difficult conditions. It is the main egy of development of Kyivenergo and a long-term plan achievement of the last year. Many achievements were of the Company’s operation. All and any directions of possible due to self-denying work of highly skilled spe- development of the power supply company will be rep- cialists employed by the Company. resented in this document. In the accounting year, Kyivenergo engaged in dynam- Kyivenergo JSK is reasonably considered to be one ic activities in several directions at a time. The opera- of the key and strategically important power supplying tions related to the construction of Pozniaky ST and the complexes of both Kyiv and Ukraine. The Company third power generating unit of Heat Plant No. 6 were has passed the tests of the hard time with dignity. The in progress, 1.3 km of heating system main pipelines Company’s activities are aimed at rendering high-qual- and 6.2 km of 110 kV cable lines as well as 2 boilers ity services to the consumers, the increase in the pow- at RK Deputatska and RK 7/13 Kotelnykova were put er capacity of the enterprise and the development and into operation. On the whole approximately UAH 177 introduction of new technologies. Under the new cir- million were invested in the power complex of the city cumstances the policy of Kyivenergo is characterized in 2008. by a persistent search for optimal and mutually profit- The employees of Kyivenergo whose number is about able solutions. 14,000 enjoyed fully the social privileges and had a The main result of the operation of Kyivenergo in 2008, possibility to rest and to go in for sports in 2008. All this is the reputation of a reliable electric power and ther- facilitates the atmosphere of understanding and the re- mal power supplier and a company that can protect its spect for common interests. interests and take quick, efficient and responsible deci- In 2009 we will face difficult tasks. First of all it is the up- sions, and whose activities prove that the Company is grading and improvement of the power supply networks, open to any constructive solutions aimed at the fulfill- construction of new substations and the improvement ment of obligations to the consumers, suppliers, part- of the operation of the existing ones. Recognizing the ners, shareholders and employees. high responsibility to the society Kyivenergo will intro- duce new power registration programs and improve the interaction with all consumers. There will be an internal Respectfully yours, E.S. Sokolovskyi restructuring in the Company in 2009. It will allow to Chairman of the Board considerably improve the efficiency of its operation. In 2009, the Company will develop and introduce a strat-
3 Kyivenergo JSC. Annual report 2008 THE COMPANY
ORGANIZATIONAL STRUCTURE
GENERAL MEETING OF SHAREHOLDERS
SUPERVISORY BOARD
BOARD OF THE COMPANY
Administration of Kyivenergo
Heat and Power Plant No. 5 Energonaladka Energozbut Kyivenergo Kyivenergo Kyivenergo Detached Division
Spetsenergoavtoservice Heat and Power Plant No. 6 Energoservice Kyivenergo Detached Kyivenergo Kyivenergo Division
Cable Networks Militarized Guards Kyivenergo Kyivenergo
Heat Networks Training Center Kyivenergo Kyivenergo
Heat Distribution Logistical Support Base Networks Kyivenergo Kyivenergo
Zhytloteploenergo Kyivenergo
Energy Plant Kyivenergo
Kyivenergo JSC. Annual report 2008 4 STRUCTURE OF THE COMPANY
THE MAIN FUNCTIONS OF THE BRANCHES AND DETACHED DIVISIONS OF KYIVENERGO
Kyivenergo consists of the Administration, 12 branches Logistical Support Base Kyivenergo – provision of and 2 detached divisions. the Company’s branches with tangible and technical resources for engaging in the production and mainte- The Administration of Kyivenergo ensures the nance activities; financial and economic activities of the Company and develops a uniform technical, economic and corporate Militarized Guards Kyivenergo – protection of the policy of the Company. Company’s facilities.
Branches: Detached divisions of the Company: Heat and Power Plant No. 5 Kyivenergo and Energozbut Kyivenergo – sale, a permanent control of Heat and Power Plant No. 6 Kyivenergo – production consumption modes and ensuring a complete payment of thermal and electric power; for the electric power and thermal power;
Heat Networks Kyivenergo, Spetsenergoavtoservice Kyivenergo – provision of Zhytloteploenergo Kyivenergo, motor transport services in the field of goods and pas- Heat Distribution Networks Kyivenergo – production, sengers transportation. transportation and distribution of thermal power;
Cable Networks Kyivenergo – transportation and dis- tribution of electric power to/among the end consumers;
Energy Plant Kyivenergo – processing of domestic and industrial waste; production, transportation and dis- tribution of thermal power;
Energonaladka Kyivenergo – setup, diagnosis, as- sembly and repairs of the main and supporting equip- ment of the power generating units and the Company;
Energoservice Kyivenergo – maintenance and serv- ice of social and catering facilities, recreation centers and the housing stock of the Company;
Training Center of Kyivenergo – training, retraining and training of employees of the Company’s branches and other enterprises belonging to the field in new and allied professions;
5 Kyivenergo JSC. Annual report 2008 STRUCTURE OF THE COMPANY
SUPERVISORY BOARD
Composition of the Supervisory Board of Kyivenergo JSC as of March 23, 2009:
Denys Sergiyovych Komarnytskyi Chairman of the Supervisory Board
Oleksandr Viktorovych Pozniakov Kapiton Trading Limited Deputy Chairman of the Supervisory Board
Members of the Supervisory Board Kyivenergoholding CJSC Fluminea Limited Nataliya Igorivna Shevchenko Oleksiy Mykolayovych Zakharchuk (Secretary of the Supervisory Board) Volodymyr Volodymyrovych Koval
Kyivenergo JSC. Annual report 2008 6 STRUCTURE OF THE COMPANY
BOARD
Eduard Stepanovych Sokolovskyi Chairman of the Board
Ivan Zakharovych Rychka Deputy Chairman of the Board
Borys Vasyliovych Yaschenko Member of the Board Dmytro Viktorovych Usatiuk Member of the Board
Mykhailo Yevgenovych Utkin Member of the Board
Dmytro Ivanovych Artiushkin Member of the Board
Olga Fedorivna Gerasymliuk Member of the Board
7 Kyivenergo JSC. Annual report 2008 STAGES OF THE COMPANY’S DEVELOPMENT
From KYIVSTRUM to KYIVENERGO: history in figures and facts
Kyivstrum State-Owned Joint Stock Company was created on April 30, 1930.
1930 The first unit of the KRES having the capacity of 21,300 kW was put into operation on May 1. The voltage of 11 kV was applied on the generators of the heat power plants of the KRES for the first time in the former USSR. 1931 Creation of the Office for power stations and networks of the Western part of the Ukrainian SSR (Zukrenergo) that included all the power facilities of Kyivstrum State-Owned Joint Stock Company. 1932 After reorganization Zukrenergo was renamed as Kyivenergo Power Enterprise. 1934 Kyivenergo Power Enterprise was reorganized into Kyivenergo District Power Office. 1935 The 2nd stage of the KRES (a turbogenerator hav- ing the capacity of 25,000 kW) was put into operation. The capacity of the plant reached 45,300 kW. Commis- sioning of the 1st stage of Heat and Power Plant 3, the first Kyiv heat and power plant having a turbogenerator of 12,000 kW and a heat removal of 32.5 Gcal/h. 1936 Commissioning of Heat and Power Plant 3 (the present ST 1) that had domestically manufactured equipment and the capacity of 12,000 kW. 1937 Completion of the construction of the 2nd stage of Heat and Power Plant 3. The capacity of the plant grew up to 36,000 kW. The first building housing the Ministry of State Farms (37 Lenina Street (the present Bogdana Khmelnytskogo Street) was connected to the heating main pipeline of Kyivenergo (main pipeline No. 2). 1939 Commissioning of the 3rd stage of the KRES having a turbogenerator of 25,000 kW. The total ca- pacity of the plant reached 70,300 kW. 1940 Consumers of heat from the Heat and Power Plant began to receive hot water for meeting everyday needs. 1941 Commissioning of a turbounit having the capa- city of 24,000 kW at Heat and Power Plant 3. The ca- pacity of the plant reached 60,000 kW. In this period, the length of the city heating network was 23 km and 160 consumers were connected to them. The thermal capacity was equal to 55 Gcal/h. The capacity of the Kyiv power system was 120MW. 1941 After the beginning of the Great Patriotic War the main equipment of the KRES, Heat and Power Plant 3 and the power networks and a part of employees and their families were evacuated to the east of the country.
Kyivenergo JSC. Annual report 2008 8 STAGES OF THE COMPANY’S DEVELOPMENT
1943 The restoration of the power system began after Commissioning of a 220kV transmission line. Commis- the liberation of Kyiv from the German occupants. The sioning of a number of 110kV transmission lines. first restored diesel generator having the capacity of Beginning of the construction of the Trypilska DRES. 300 kW began to operate at Shevchenkivskyi DMS. The installed capacity of the power plants of the system grew up to 681,000 kW. 1945 The first restored unit was put into operation at Commissioning of the Kyiv Hydraulic Power Plant. The Heat and Power Plant 3. The capacity of the power sys- full capacity of the reservoir of the Kyiv Hydraulic Power tem was 35,900 kW. Plant was 3.73 km and the useful capacity was 1.17 km. 1949 The capacity, the production volume and the 1966 Commissioning of PT6090/13 turbounit No. 3 technoeconomic parameters exceeded the level of the having the capacity of 60,000 kW at the Cherkasy Heat pre-war year 1940. The installed capacity of the system and Power Plant. Connection with Vinnytsiaenergo was 125,000 kW. (Burshtyn DRES) by means 330 kV transmission lines. Creation of Kyivenergoremont. 8 substations having the voltage of 35 kV were shifted 1950 Commissioning of the first cable networks of to the voltage of 110 kV. 35kV. 1968 Kyiv Hydraulic Power Plant reached its full 1951 Beginning of the construction of the Darnytsia capacity of 361 MW. Heat and Power Plant. The third high-pressure unit 1967 Completion of uniting all Ukrainian power sys- having the capacity of 30,000 kW was put into service tems by means of 220-330 kV aerial circuits. It increas- at Hydropower Station 2. The installed capacity of the ed the reliability of the power supply to consumers. system was 155,100 kW. Commissioning of 6 units having the total capacity of 1952 After new equipment was put into operation at 111 MW at the Kyiv Hydraulic Power Plant, a PT6090/13 Heat and Power Plant 3, the capacity of the plant grew turbogenerator of 60 MW at the Cherkasy Heat and up to 62,000 kW. The installed capacity of the plants Power Plant, and 2 PTVM100 water-heating boilers belonging to the system was equal to 180,800 kW. at the Darnytsia Heat and Power Plant. Nyvky District Boiler was transferred to Kyivenergo. 1954 Commissioning of the first stage of the Darnytsia Beginning of the construction of Kyiv Heat and Power Heat and Power Plant having the capacity of 50 MW. At Plant No. 5. that time, it was one of the biggest and best Heat and 4 units having the capacity of 74 MW were put into Power Plants in the former USSR. A water-cooling tower operation at the Kyiv Hydraulic Power Plant. of precast concrete was assembled at the Darnytsia Heat and Power Plant for the first time in the former USSR. 1969 A power generating unit with 2-body boilers having the capacity of 300 MW and consuming both 1957 Kyiv, Zhytomyr, Cherkasy and Chernihiv regional solid fuel and natural gas was put into operation at the power grids were included in the Kyiv power system. Trypilska DRES for the first time in the former USSR. The first Kyiv-Kremenchuk 330 kV aerial circuit was By the end of the year, they supplied electric power to commissioned. It allowed to join the Kyiv and Dnieper 89% of localities of four regions (Zhytomyr, Kyiv, Cherni- systems for a parallel operation. giv and Cherkasy regions), 94% of the total number of Beginning of the construction of the Kyiv hydraulic collective farms and 95% of state farms. power cascade. The installed capacity of the power plants of the system 1961 The Kyiv power system was connected to the was 1,116.8 MW. high-voltage network of the European part of the USSR A capacity reserve of 41,000 kW was obtained in the through the Southern power system by means of a 330 power system for the first time. kW KremGESZhovtneva high-voltage line. 1970 Commissioning of three power generating units 1962 Creation of the Ukrainian SSR Ministry of having the capacity of 300 MW each at the Trypilska Energy and Electrification. DRES. The installed capacity of the plants belonging to the power system was 2,008 MW and the capacity 1964 The Chrkasy and Uman power systems were reserve in the system increased up to 53.3 MW. Com- included in the Kyiv power system in connection with missioning of the Kyiv Storage Plant that was the first the liquidation of the Cherkasy Council of National in the former USSR. Economy.
9 Kyivenergo JSC. Annual report 2008 STAGES OF THE COMPANY’S DEVELOPMENT
1972 The capacity of 225 MW was reached. The operation at Heat and Power Plant No. 6 for the first full reservoir capacity was 0.0046 km and the useful time in the former USSR. one was 0.041 km. Beginning of the construction of the Chornobyl Nu- 1982 TGMP334 A boilers having manufacturer’s num- clear Power Station. Extention of 330 and 110 kV bers 1 and 3 were commissioned at Heat and Power substations. Plant No. 6 for the first time in the former USSR. 1971 Load was supplied to the first turbogenerator 1983 First tests were conducted in the sphere of an having the capacity of 60 MW at the Bila Tserkva Heat automatic power consumption control. and Power Plant. 1995 On September 28 Kyivenergo State-Owned Power unit No. 1 having the capacity of 100 MW and Power Supply Company was created by virtue of Order the thermal power of 160 Gcal/h and a PTVM 180 of the Ministry of Energy of Ukraine No. 177 dated water-heating boiler were commissioned at Kyiv Heat August 31, 1995. Being the capital local power system and Power Plant No. 5 for the first time in Ukraine. the Company integrates the functions of the generation, 1976 The station reached the design capacity of distribution and sale of electric and thermal power. 700 MW. 1998 Kyivenergo Power Supply Company was creat- 1972 The rural power grids of Kyiv, Zhytomyr, Cher- ed on the basis of the Kyivenergo State-Owned Power kasy and Chernihiv regions were subordinated to Supply Company by virtue of a resolution of the Kyivenergo District Power Office. General Meeting of Shareholders (Minutes No. 1/98 Commissioning of the Kaniv Hydraulic Power Plant dated April 20, 1998). which reached its design capacity of 444 MW in 1975. An agreement in the amount of USD 200 million was The full reservoir capacity was 2.93 km and the useful made with the International Bank of Reconstruction one was 0.33 km. and Development (IBRD) in October 1998, for financ- The design capacity of the Trypilska DRES reached ing a project of rehabilitation and extension of the 1,800 MW. centralized thermal power supply to Kyiv. Beginning of the construction of the Chernihiv DRES. 2000 A 110/10 kV closed deep input substation styled 1974 A monoblock having the electric power of “Center” with a 110 kV electric and gas distribution de- 250/300 MW and the thermal power of 330 Gcal/h was vice 10 kV outgoing line vacuum switches was com- put into operation at Kyiv Heat and Power Plant No. 5 missioned for the first time in Ukraine. for the first time in the former USSR. Completion of the 2002 One of the most state-of-the-art 330 kV construction of the second stage of the Heat and Power switches was put into operation in the 330 kV distribu- Plant. During 1972-1974, the employees of Heat and tion device at Heat and Power Plant No. 6. Power Plant No. 5 made 400 labor-saving suggestions. 2004 The construction of power generating unit 1975 7 units having the total capacity of1 29.5 MW No. 3 of Heat and Power Plant No. 6 was in progress. and 3 units having the total capacity of 55.5 MW were The TGV3202PUZ generator manufactured by Elek- commissioned at the Kaniv Hydraulic Power Plant. The trovazhmash Research and Production Association, Plant reached the design capacity of 444 MW. Kharkiv, is a novelty of the domestic industry. 1976 A resolution was passed to build Heat and Power 2007 Completion of the performance of the Loan Plant No. 6 – a new source of the electric and thermal Agreement with the IBRD. In this period, 77 contracts power. Kyiv Heat and Power Plant No. 5 reached the were made in the amount of USD 171 million. In accord- design capacity of 700 MW (electric) and 1,514 Gcal/h ance with these contracts operations related to the com- (thermal). pletion of the construction of Pozniaky RK, the recon- Kyivenergo Production Power Office (PPO) was created struction of ST1 heating supply station, the construction on the basis of Kyivenergo District Power Office. and reconstruction of 110 kV ST1, Vokzalna and Solo- 1977 Commissioning of 110 kV cable networks. Com- mianska electric power substations were performed. missioning of the first power generating unit having the 2008 Commissioning of assets in the amount of UAH capacity of 1,000 MW and a RBMK1000 reactor at the 159,718 thousand. The drawn funds allowed to perform Chornobyl Nuclear Power Station. operations relating to the reconstruction and moderni- 1981 Commissioning of the first power generating unit zation of the Company’s power facilities. having the capacity of 250 MW at Kyiv Heat and Power In particular a retrofitting of the facilities of the Compa- Plant No. 6. ny’s main branches was accomplished and advanced KVUM 180 peak water-heating boilers were put into technologies were introduced.
Kyivenergo JSC. Annual report 2008 10 HUMAN RESOURCES
The human resources policy of Kyivenergo en- AND SOCIAL POLICY sures an optimal balance of the processes of replenishment and preservation an efficient com- position of the employees, the motivation and development of the personnel in accordance with the needs, objectives and tasks of the Company.
The main directions of the Company’s human In 2008, 130 young experts who graduated from resources policy are as follows: higher educational institutions were employed by the branches and the Administration of Kyivenergo. planning, creation and monitoring of the Company’s internal human resources reserve; NUMBER AND STRUCTURE OF realization and improvement of a THE WORKING PERSONNEL Personnel Training program; support and an effective development Total number of the Company’s employees: of the internal communications; as of January 1, 2006 – 14111 persons development and introduction of non-financial incentives for the personnel; as of January 1, 2007 – 13636 persons development of the corporate culture. as of January 1, 2008 – 13472 persons as of January 1, 2009 – 13970 persons The development of the human resources potential for the purpose of fixing experts at the enterprise is Analysis of the Company’s primarily due to the formation and use of the Com- personnel turnover: pany’s internal reserve: promotion of employees studying at higher educational institutions, young 2006 – 6,42 % experts and workers having higher education. The 2007 – 7,26 % personnel were also selected from external sources by means of modern selection methods. 2008 – 5,58 %
Distribution of the personnel in accordance with the Company’s organizational structure
Heat Networks, Heat Distribution Networks, Militarized Guards, Energo- Zhytloteploenergo naladka, Energoservice, 7695 (51%) Logistical Support Base, Training Center, Spetsenergo- Energy Plant avtoservice Detached Division 285 (2%) 1922 (13%)
Energozbut detached Division Administration 1285 (8%) 831 (5%)
Cable networks Heat and power plants 1638 (11%) 1476 (10%)
11 Kyivenergo JSC. Annual report 2008 HUMAN RESOURCES AND SOCIAL POLICY
Specific weight of the personnel number in AVERAGE MONTHLY WAGES OF THE PER- the personnel categories of Kyivenergo JSC SONNEL IN THE YEAR in 2007 – 2008 The terms of the remuneration of labor are determined in the collective bargaining agreement and provide for the observance of the guarantees determined by 68,0 % 67,6 % the Labor Code of Ukraine, the Remuneration of La- bor Law of Ukraine, the Collective Bargaining Agree- ments and Contracts Law of Ukraine, the Enterprises 2007 in Ukraine Law of Ukraine, the Industrial and General 2008 Agreements, other Ukrainian acts of law and regula- tions regulating the calculation of the wages of the Company’s employees. 19,8 % 19,3 % In 2008, the minimum monthly salary of the Company’s 12,7 % 12,6 % employees performing unskilled operations amounted to UAH 1,025 and the salary of main production worker 1st class amounted to 1,280. In 2008, the wages fund amounted to UAH 490,397,8 managersprofessionals, experts workers thousand. In particular the basic wages fund was UAH and engineering 324,735.2 thousand. The specific weight of the basic employees wages in the wages fund was equal to 66%. The additional wages fund amounted to UAH 142,680.7 thousand or 29% of the wages fund. The specific weight of the employees holding the of- fices of manages, professionals, experts, technical em- Other incentive and entitlement payments amounted to ployees and workers in the total number did not almost UAH 22,982.1 thousand or 5% of the wages fund. change (as compared with 2007). In 2007, these indicators were as follows:
TRAINING OF THE PERSONNEL The basic wages – 63%; The additional wages – 27.8%; In 2008, training was organized and held for the Company’s employees in the following directions: The other incentive and entitlement payments – 9.2%. personnel training and retraining – 274 persons; improvement of the worker’s skills – 1,363 persons; Wages fund improvement of the skills of managers, professionals, 63,0 % experts, and technical employees – 1,126 persons. 66,0 % As of January 1, 2009, 2007 3,685 persons were subject to training and testing in 2008 the sphere of fire safety; they included 710 managers, 362 professionals and experts and 2,613 workers; 29,0 % 2,249 persons were subject to training and testing in the 27,8 % sphere of labor safety rules; they included 322 mana- gers, 154 professionals and experts and 1,773 workers; 9,2 % 98 persons took a course in civil defense; they includ- 5,0 % ed 53 managers, 34 professionals and experts and 11 workers;
6 persons were trained abroad: 4 managers and The basic The additional The other incentive 2 professionals. wages wages and entitlement payments
In 2008, the average monthly wages of one full-time employee increased by 28.7% (UAH 3,149 in 2008 and UAH 2,446 in 2007)
Kyivenergo JSC. Annual report 2008 12 HUMAN RESOURCES AND SOCIAL POLICY
Additional payments to the Company’s employees and unemployed retirees
Amount (UAH, thousand) Payment types 2007 2008 Benefits paid on the basis of employees applications in connection with family 534,2 579,1 circumstances, for the purpose of treatment, health improvement of children and to families having many children Benefits paid in case of birth of a child 78,5 106,4 Benefits paid to the Companies employees staying on a maternity leave 140,1 143,8 Monthly payments to orphan and semi-orphan children 48,9 49,9 Additional payments to unemployed retirees 84,8 86,9 Total: 886,5 966,1
LABOR PROTECTION
The administration of Kyivenergo pays a special at- The Company’s experts performed the following tention to the organization of taking of legal, organiza- operations in 2008, in order to prevent occupa- tional-and-technical, sanitary-and-hygienic, and treat- tional injuries: ment-and-preventive measures aimed at the prevention organization of a system of control of the labor protec- of accidents and occupational diseases that may occur tion status at workplaces; in the labor activities. organization and introduction of a monthly Labor The Company controls the existence of harmful indus- Protection Day in the Company; trial factors at workplaces. organization and a permanent provision of training of the The operations related to ensuring the employee’s la- Company’s personnel in the methods of rendering of a bor protection is aimed at: before-doctor assistance to persons injured in accidents; holding systematic trainings, seminars, and courses organization and conducting of a number of exami- for the Company’s personnel in the sphere of the labor nations of the labor protection status during the per- protection skills improvement; formance of emergency and restoration operations in the following branches of the Company: Zhytlo- reduction of hazardous workplaces and the influence teploenergo, Heat Networks, Cable Networks, and of harmful industrial factors on the employees staying Heat Distribution Networks; in zones of high noise, vibration, etc.; organization of systemic examinations of the labor protection of employees from the electrical shock (pro- protection and production discipline status at the work- vision with individual and collective protective means); places of the shift-team personnel of the branches; ensuring an increased protection in case of altitude information materials are developed in connection with operations; all accidents; they contain a list of measures to be provision of the employees with timely information on taken in order to prevent similar situations. the protective measures and means at workplaces; In 2008, UAH 4,739.6 thousand were spent on the ensuring and improvement of working conditions. labor protection including UAH 4,068.682 thousand spent on measures provided for in the collective bar- gaining agreements. UAH 860.49 thousand were spent on compulsory medical examinations and the medical care and UAH 86.186 thousand were spent on the evaluation of the employees.
13 Kyivenergo JSC. Annual report 2008 HUMAN RESOURCES AND SOCIAL POLICY
SOCIAL POLICY
A reliable social policy of the Company is the neces- SPORT sary part of the modern management. The main princi- ples of the social policy of Kyivenergo are as follows: Last year, approximately 3 thousand employees and members of their families visited the sports and health creation of the necessary conditions for an efficient improvement complex located in the territory of Heat professional and personal development of the and Power Plant No. 6. The Company’s employees employees for the purpose of ensuring a high level of could both improve their physical condition by means their functioning; of gym apparatuses or in a pool and participate actively in the preparation and competitions that are organized realization of the principles of the social partnership every year at the Company. In 2008, there was the and mutual responsibility of the parties in the relations 8th Sports Contest; its program included competitions between the Company’s administration and the in various sports, namely basketball, volleyball, mini employees; football, a cross-country race, sports fishing, “Merry a permanent social development of the team taking Starts”, etc. into account the interests of all employees. Creation The best amateur sportsmen of Kyivenergo partici- of a system of social-and-labor rights and guarantees pated in interindustry (among workers employed in the consciously forming the corporate belonging to the industry), industry and city sports contests of workers Company; employed in the field of energy as well as a mini foot- a permanent and dynamic development of the person- ball competition among workers employed by power nel administration system on the basis of advanced supplying companies. and efficient personnel incentive systems (financial and non-financial). CARE FOR RETIREES
RECREATION КThe Company provided its veterans with additional benefits in accordance with the Kyivenergo Unem- In 2008, 635 children of the Company’s employees ployed Retirees Additional Social Support Regulations. were on holiday in health improvement centers of In 2008, 2,209 unemployed retirees were provided Ukraine and in the Energy Children’s Health Improve- with the additional social support while in 2007, their ment Center belonging to the branch Energoservice number was 2,168. Kyivenergo by virtue of preferential vouches.
Last year, the employees of Kyivenergo did not receive IMPROVEMENT OF PROFESSIONAL SKILLS vouchers in connection with an introduction of a health improvement benefit payable when the regular leave Last year, the fifth traditional professional skills is given. competition was held among the operating employees of the Company. 85 experts of Kyivenergo competed for the title “The Best Team of Electricians” and “The Best Team of Heat Experts”. The winners received bonuses.
SUPPORT OF YOUNG POWER ENGINEERING SPECIALISTS In 2008, 7 young experts of Kyivenergo participated in a open competition styled “Youth for the Power Engineering of Ukraine” that was organized and held by the Ministry of Fuel and Energy of Ukraine. They won 5 prizes having taken two first, one second and two third places.
CORPORATE PUBLICATIONS 13 issued of the corporate newspaper “Kyivenergo Today” were published in 2008. It is an integral part of the everyday work of the Kyiv power engineering specialists. The newspaper deals with the main events in the company. It is published once a month and its circulation is 5,000 copies.
Kyivenergo JSC. Annual report 2008 14 HUMAN RESOURCES AND SOCIAL POLICY
AWARDS AND DECORATIONS
The following employees of the Company were given state and industrial awards:
HONORED POWER ENGINEERING MEDAL “EXCELLENT RESULTS IN SPECIALIST OF UKRAINE THE POWER ENGINEERING OF UKRAINE”»
Sergiy Stepanovych Krykun, Director of Energy Plant Igor Andriyovych Zaplotinskyi, Deputy Head, Kyivenergo; Centralized Metal Control Service, Energonaladka Kyivenergo; Oleksandr Mykhailovych Marnialo, shiftman of the Boiler and Turbine Department of Heat and Power Albert Oleksandrovych Bezprozvanyi, Head, Re- Plant No. 6 Kyivenergo search and Technical Development and Power Equip- ment Diagnosis Service, Energonaladka Kyivenergo; DIPLOMA OF THE CABINET OF Igor Oleksiyovych Zhvakin, Head of Militarized MINISTERS OF UKRAINE Guards Kyivenergo; Mykhailo Dmytrovych Piven, shiftman of the Boiler Ivan Stakhovych Kaspruk, mechanic 6 class for and Turbine Department, Heat and Power Plant No. 5 repair of steam-and-gas turbine equipment of the Kyivenergo. Boiler and Turbine Department of Heat and Power Plant No. 5 Kyivenergo; Mykola Fedorovych Maistrenko, district head, the 1st group, heat network district No. 6, Heat Networks Kyivenergo.
MEDAL “HONORARY POWER ENGINEERING SPECIALIST OF UKRAINE”
Tamara Volodymyrivna Potiekhina, senior inspector, Labor Protection Group, Energonaladka Kyivenergo; Yuriy Yakovych Berezovskyi, Head of the Estimate Operations Department of the Administration; Dmytro Grygorovych Okhrimenko, leading engineer of the Heat Engineering Service of the Administration; Fedir Mykytovych Veresotskyi, master for repairs of thermal automatic devices and meters, Department of Thermal Automatic Devices and Meters, Heat and Power Plant No. 5 Kyivenergo; Igor Gavrylovych Kovtun, Head of Heat Distribution Networks Office No. 9, Heat Distribution Networks Kyivenergo; Grygoriy Pavlovych Ostrovyi, Deputy Director – Head of Livoberezhnyi RKM, Cable Networks Kyiv- energo.
15 Kyivenergo JSC. Annual report 2008 COMMUNICATION POLICY
МУЗЕЙ
The Museum of Kyivenergo was opened in 2005. The main objective of the Museum is the creation, preser- vation, study and popularization of power engineering facilities, the industry-related science and engineering. Information on the past events in the power engineering and the level of the material and technical development thereof both preserves and accumulates achievements of the mankind and determines the ways of its further progress in general and the development of the power engineering in particular. More than 5,000 persons familiarized themselves with the exposition of the Museum of Kyivenergo in 2008. An all-Ukrainian research and practical conference of museum workers of Ukraine was held in the same year. Research conferences, symposia and meetings of veterans of the power engineering are regularly held on the basis of the Museum. Students of specialized higher educational institutions, teachers, and research workers use the unique historic documents, books, monographs, articles, pictures and video resources of the Museum for writing their research papers, articles, lectures, etc.
Kyivenergo JSC. Annual report 2008 16 COMMUNICATION POLICY
In 2008, approximately 490 thousand applications The help-desk service “1588” was created at were received by the service “1588” from the residents Kyivenergo 9 years ago. Its purpose is to provide the of Kyiv (as compared with 720 thousand in 2007). 60% residents of Kyiv with prompt, relevant and efficient of the consumers’ applications concerned the matters information concerning the heat and power supply related to the power supply, 12% – heat supply, and services provided by the Company and to receive a 28% of applications were applications for information. feedback and an objective opinion of the consumers on the quality of the products and services provided by Kyivenergo.
The main task of the service “1588” is: provision of the consumers with prompt information concerning the operation of the power supply system of the city; receipt of applications concerning failures of the power and heat supply systems and a poor operation of electric power meters from the residents of the city; provision of the consumers with information concern- ing the procedure of payment for the consumed power, current tariffs, preferences and consumer categories as well as the operation and the list of services ren- dered by the Company’s divisions; provision of the managers and the divisions of the Company with the necessary information on the status of the supply of power to consumers.
17 Kyivenergo JSC. Annual report 2008 ELECTRICAL POWER ENGINEERING
DESCRIPTION OF ELECTRIC POWER PLANTS AND POWER SUPPLY NETWORKS
Installed capacity of the electric power plants: Heat and Power Plant No. 5 Kyivenergo: 700 MW; Heat and Power Plant No. 6 Kyivenergo: 500 MW. The total length of the cable transmission lines is approximately 9.9 thousand km; the length of the aerial lines is 1.58 thousand km. The majority of the cable transmission lines fall on dis- tribution network lines of 10 kV and 0.4 kV. The majority of the aerial transmission lines are 110 kV high-voltage and 0.4 kV low-voltage lines. The transformation and power supply management is carried out at 60 substations of 35-110 kV having the total capacity of 3670,4 MVA and 3175 transforming substations of 6-10/0.4 kV having the total capacity of 2261 MVA 5203 power transformers having the voltage of 10-110 kV and 4395 switches are installed in the cable networks.
Supply of electric power in 2006-2008
Year Supply of electric power, kW-hr, million 2006 5011,0 2007 4388,6 2008 4020,1
Kyivenergo JSC. Annual report 2008 18 ELECTRICAL POWER ENGINEERING
MEETING THE NEEDS OF THE CITY
In 2008, the useful supply of electric power to the con- lines at sections ACL35 kV “PHP2 – Oktiabrska A”, sumers of Kyivenergo increased by 7.97% as com- “PHP2 – Oktiabrska B”, “Bortnychi – Osokorky”, “Dar- pared with 2007 and reached 8,118.2 million kW-hr. In PHP – KPTF” in order to meet the growing needs of the particular the consumption of power by building organi- city. In addition the capacity of 35110 kV substations zations increased by 19.99%, by non-industrial con- (SS) was increased: a transformer having the capacity sumers – 14.75% and by the population – 12.07%. of 40 MWA was replaced with a transformer of 63 MVA at the Mototsykletna substation and transformers of In 2008, a cable line (CL) of 110 kV “Bastionna – 25 MWA were replaced with transformers of 40 MVA Vokzalna” and an aerial cable line (ACL) of 110 kV at the Tatarska and BUM substations. Reconstruction “Polytekhnichna – Center” were put into operation and operations were performed at the Vokzalna and Solo- aerial cable lines were partially replaced with cable mianska substations.
Dynamics of electric power consumption in Kyiv, kW-hr, million
8118,2 7518,6 6830,7 7260,2 6353,4 6048,6 5523,5 5666,4 5025,5
2000 2001 2002 2003 2004 2005 2006 2007 2008
19 Kyivenergo JSC. Annual report 2008 ELECTRICAL POWER ENGINEERING
Electric power consumption structure, kW-hr, million
Population Industrial consumers 33% 38%
Budget organizations Non-industrial consumers 10% 19%
TARIFFS
Correlation between tariffs and costs, structure of costs related to the power production, transmission and supply
Indicators 2006 2007 2008
Average weighted electric power supply tariff (taking into account the sale of 19,62 26,84 36,74 electric power to the Power Market), kopecks/kW-hr
including:
Average weighted retail tariff on electric power for consumers (taking into account 20,68 28,72 37,45 the fixed tariff for the population)
Total costs on a unit of supplied electric power, kopecks/kW-hr 18,17 25,62 34,98
including:
Costs related to fuel 4,14 6,08 8,28
Costs without fuel 0,50 0,46 0,74
Remuneration of labor 0,63 0,70 0,97
Social deductions 0,24 0,26 0,37
Depreciation deductions 0,47 0,38 0,42
Purchase of electric power from the Power Market 11,53 17,09 22,7
Other costs * 0,66 0,64 1,5
Ptofit per unit of supplied electric power, kopecks/kW-hr 1,45 1,22 1,76
* taking into account written-off bad debts and the charged doubtful debt reserve.
Kyivenergo JSC. Annual report 2008 20 ELECTRICAL POWER ENGINEERING
In 2008, retail tariffs on the electric power for the con- to 43.58 kopecks/kW-hr (exclusive of the VAT) and for sumers of the 1st group were formed by the National the consumers of the 2nd-classvoltage (up to 27.5 kV) Energy Regulation Commission of Ukraine in accord- they amounted to 58.46 kopecks/kW-hr. They exceed- ance with Decree of the Cabinet of Ministers of Ukraine ed the tariffs of December 2007 by 50.5% and 49.8% No. 745 dated August 15, 2005 “On the Transfer to respectively. Uniform Retail Tariffs on Electric Power Supplied to In 2008, the retail tariffs for the population did not change Consumers”. and amounted to 20.3 kopecks/kW-hr (exclusive of the In December 2008, the retail tariffs for the consumers VAT) for the consumers using gas stoves and 15.6 ko- of the 1st-class voltage (27.5 kV and above) amounted pecks/kW-hr for the consumers using electrical ranges.
Dynamics of changes of the tariffs of Kyivenergo JSC (exclusive of the VAT)
Average monthly electric power purchase tariff (from own Heat and Power Plants till October 2005 and from ORE since October 2005), kopecks/kW-hr
2006 2007 2008
Average weighted retail tariff on supply of electric power to suppliers, kopecks/kW-hr
2006 2007
2008 45
40
35
30
25
20
15
10
5
0 X XI XII VI VII VIII XI I II III IV V
21 Kyivenergo JSC. Annual report 2008 HEATING ENGINEERING
DESCRIPTION OF HEAT SOURCES AND HEAT NETWORKS The installed thermal power of Hear and Power Plant 5 is 1874 Gcal/h, Hear and Power Plant 6 – 1740 Gcal/h, heat networks – 3106 Gcal/h, Zhytloteploenergo – 1731 Gcal/h, Energy Plant – 104 Gcal/h. The total power of the Company’s heat sources is 8555 Gcal/h. However the available thermal power of the Company’s heat sources is 7880 Gcal/h which is caused by the natural aging and exhausted life-time of units. Heat is distributed and transported to consumers by means of a network of hot-water pipelines having the total double-pipe length of 2271 km. Heat Networks Kyivenergo maintains 923 km of heat networks of which 93 km were laid by means of a pre- insulated pipes technology. In addition to the pipeline this branch operates 19 pump stations ensuring the necessary hydraulic mode of heat networks operation. The heat distribution networks perform the function of distributing heat among end consumers and are fed directly from the main pipelines of Heat Networks Kyiv- energo. The branch owns and maintains 2080 heat points and 955 km of heat networks. The length of the heat networks of Kyivenergo is 387 km and those of Energy Plant are 5,2 km long. The enterprise operates hot-water pipelines having the diameter of 32 to 1,220 mm; the main part thereof has the diameter of 57 to 426 mm.
Supply of heat energy in 2006 – 2008
Year Supply of heat from collectors, Gcal, thousand 2006 15255,9 2007 14774,8 2008 14142,1
Kyivenergo JSC. Annual report 2008 22 HEATING ENGINEERING
MEETING THE NEEDS OF THE CITY
In 2008, the useful supply of the thermal power was lines of the hot-water supply (HWS) networks 142.5 km 11,688.6 thousand Gcal. During the year, the increase of heat networks have been laid by means of the PIP in the connected heat load was 111.170 Gcal/h. technology including 93.3 km belonging to Heat Net- works Kyivenergo, 33.9 km belonging to Heat Distribu- For the purpose of improvement of the heat network tion Networks Kyivenergo, and 15.3 km belonging to operation pipes are laid and repeatedly laid by means Zhytloteploenergo Kyivenergo. The Company operates of an advanced technology that provides the use of pre- 16.3 km of pre-insulated plastic pipelines of the HWS insulated pipes (PIP) and pre-insulated plastic pipe- networks (double-pipe).
Dynamics of heat power consumption in Kyiv, Gcal, thousand
13980,00 13358,90 13343,10 12917,70 12809,80 12182,00 12323,80 11688,60 11040,70
2000 2001 2002 2003 2004 2005 2006 2007 2008
Heat power consumption structure, Gcal, thousand
Budget organizations Housing operation organizations 13% 77%
Industrial consumers Other 1% 9%
23 Kyivenergo JSC. Annual report 2008 HEATING ENGINEERING
TARIFFS
In 2008, the Company sold thermal power at the tariffs In connection with the fact that the tariffs on the supply approved by the following orders of the Kyiv City State of thermal power to housing operation organizations Administration: were established at a level that is lower than their economically sound level the compensation for the ac- No. 643 dated May 30, 2007 – for housing operation tual costs was 54% only in 2008. Taking into account organizations; the tariffs were introduced as of the fact that the share of these consumers in the December 1, 2006 and amount to UAH 94.64 per 1 Gcal consumption structure is 77% the Company’s losses (exclusive of the VAT) if the house thermal power meter that have to be compensated for at the expense of the is owned by the Company and UAH 94.33 per 1 Gcal if local budget in accordance with Article 20 of the Heat the house thermal power meter is owned by the owner Supply Law of Ukraine amounted to UAH 946 million. of the dwelling house or is unavailable; As of the end of the year only UAH 387 million or 41% No. 86 dated January 31, 2007 – for budget organiza- of the said amount were compensated for. tions and other consumers; the tariffs were introduced In addition the Company was not compensated for as of February 1, 2007. They were valid till November losses incurred in 2008 in the amount of UAH 174 30, 2008 and amounted to UAH 171.62 per 1 Gcal million in connection with the difference in the tariffs (exclusive of the VAT). In December, the Company on thermal power for budget organizations and other applied the tariffs that had been introduced by Order consumers; till November 30, 2008, these tariffs also of the Kyiv City State Administration No. 1662 dated were lower than their economically sound level. November 27, 2008. They amounted to UAH 251.04 for budget organizations and UAH 535.23 per 1 Gcal for other consumers.
Average supply tariffs and structure of the actual cost of thermal energy at Kyivenergo, UAH/Gcal (exclusive of the VAT)
Indicator 2006 2007 2008 I. Average supply tariff 65,13 111,54 120,10 II. Actual cost 100,77 153,06 196,95 including: Costs related to fuel 60,73 100,47 119,24 Costs (without fuel) 10,88 16,28 26,31 Remuneration of labor 12,52 18,61 26,07 Social deductions 4,7 6,97 9,78 Depreciation costs 3,9 5,14 5,52 Other costs * 8,04 5,59 10,03 III. Profit -35,64 -41,52 -76,85 Profit including other operating incomes ** -8,68 -9,37 -43,71
*) taking into account written off bad debts and the charged doubtful debt reserve. **) the other operating incomes were derived due to subsidies paid from the city budget as a compensation for losses incurred in connection with the difference in the tariffs on thermal power sullied to housing operation organizations.
Kyivenergo JSC. Annual report 2008 24 ENVIRONMENTAL PROTECTION
In well-developed companies, the ecological manage- AMOUNT OF ACCUMULATED, DISCHARGED ment is one of the corporate priorities since it ensures AND USED SOLID WASTES systematization of a company’s approach to the environmental protection. Vanadium containing sludge is accumulated in sludge accumulating facilities of HPP 5 and HPP 6. The Com- Kyivenergo JSC also pays much attention to the pany is developing ways of a possible transfer thereof protection of nature and aspires at the creation of an to Ukrainian metallurgical enterprises. The influence ecology-oriented society that is characterized by re- of the accumulating facilities on underground water duction of the negative influence on the environment is systematically controlled by laboratories of the accompanied with an insignificant resource consump- branches and the chemical service of Energonaladka. tion and a high energy efficiency of the process. Waste luminescent lamps are transferred to special processing enterprises on a contractual basis and ATMOSPHERE solid domestic wastes are transferred by the Com- In 2008, the emission of harmful substances into the pany’s branches to Energy Plant for the purpose of a atmosphere decreased by 568 tons (6.33%) as com- further utilization. Thus 231,9 thousand tons of solid pared with 2007. It was achieved due to reduction of domestic wastes were utilized at Energy Plant in the burnt fuel quantity by 142 128 tons of standard coal, 2008. It is by 5,1 thousand tons more than in 2007 a 7.4% reduction in the production of electric power (226,8 thousand tons). and a 4.28 reduction in the supply of heat. ECOLOGICAL PAYMENTS PROTECTION AND CONSERVATION OF In 2008, the charge for a special use of water WATER RESOURCES paid by Kyivenergo to the budget amounted In connection with a considerable reduction of the to UAH 2 183 815,20. In 2007, this amount was share of black oil in the fuel balance the amount of ef- UAH 1 775 764,71. fluents containing black oil was reduced and the actual In 2008, the amount of the paid environment pollution capacity of sewerage disposal plants decreased. charge increased by UAH 291,2 thousand (7.7%). It was In 2008, the intake of surface water decreased by accompanied with a reduction in the amount of emissions 6944,7 thousand m3 (1.93%) as compared with 2007. It through indexing the charge standards by the consumer was due to reduction in the production of electric power prices index for 2007 that was equal to 1,166. by 372,242 million kW-hr (7.4%).
25 Kyivenergo JSC. Annual report 2008 ENVIRONMENTAL PROTECTION
Average annual value of the main nature-conservative production fixed assets
Including Production fixed assets Branches Water resources protection Air protection 2008 2007 2008 2007 2008 2007 Heat and Power 4528,600 4528,600 4528,60 4528,600 - - Plant No. 5 Heat and Power 20772,465 21839,782 20709,705 21773,797 62,761 65,985 Plant No. 6 Heat Networks 536,469 566,971 523,375 550,284 13,094 16,687 Cable Networks ------Spetsenergo- 568,942 598,175 568,942 598,175 - avtoservice Detached Division Energozbut -- - Detached Division Heat Distribu- -- - tion Networks Energy Plant 7110,093 6078,197 350,766 357,071 6759,327 5721,126 Zhytloteplo- 0,251 0,296 - 0,251 0,296 energo Total 33516,821 33612,021 26681,388 27807,927 6835,433 5804,094
Costs related to the repairs of the main nature-conservative production fixed assets
Including Overhaul costs Branches Water resources protection Air protection 2008 2007 2008 2007 2008 2007 Heat and Power 0,0 0,0 0,0 0,0 0,0 0,0 Plant No. 5 Heat and Power 931,000 419,042 931,000 419,042 - - Plant No. 6 Heat Networks 24,116 27,348 24,116 27,348 - Cable Networks 0,0 0,0 - Spetsenergo- 0,0 0,0 0,0 0,0 - avtoservice Detached Division Energozbut -- - Detached Division Heat Distribu- -- - tion Networks Energy Plant 1384,468 285,144 81,468 41,144 1303,00 244,00 Zhytloteplo- 0,0 - 0,0 energo Total 2339,584 731,534 1036,584 487,534 1303,00 244,00
Kyivenergo JSC. Annual report 2008 26 INVESTMENT POLICY AND PROJECTS
For the purpose of ensuring the power needs of the Heat networks were laid anew in Yakira, Kutuzova, capital the Company invests considerable funds in Zhylianska, Bakynska, Lvivska, Verkhovynna, Lebe- order to improve the per capita power consumption of deva, Vozyednannia, Geroiv Stalingrada, Kashtanova Kyiv. The main direction of this policy is an efficient use streets and avenues, RK Bortnychi, etc. A crosspiece of financial resources for the construction of new and was built by means of pre-insulated pipes in Bazhana reconstruction the existing power facilities and for com- Avenue. 4 TsTP were reconstructed and 17 ITP were missioning a modern process equipment at the heat equipped. and power plants, in cable and heat networks, the heat A 35 kV cable line was laid in the areat of DHPP – KPTF production sources, etc. and in Volodymyrskyi uzviz, 10 kV and 0,4 kV cable In 2008, Kyivenergo JSC made capital investments in lines were laid in Smolenska, Metalistiv, Stolychne the amount of UAH 177 million in order to restore, shoes, Gazova, Tankistiv streets and in Mysholovka preserve and improve the power complex of Kyiv as well as in Southern, Western, Northern and Cen- including: tral areas. 2 TP 630 KVA transformers were installed in Stolychne shose Street in Golosiivskyi district and over UAH 67 million – at the expense of the city budget 2 KTPGS 400/10 SK transformers were installed in UAH 110 million – at the expense of own funds Gazova and Tankistiv Street. Two 25 MVA transformers were replaced with 40 MVA transformers at the VUM In 2008, 1,3 km of main heat networks, 19,5 km of substation and the Tatarska substation. distribution networks, 6,2 km of 110 kV cable lines, 2 TM1000/10 transformers, and 2 boilers No. 3 at RK Construction operations were in progress at RK Deputatska, 2 and st. No. 1 RK 7/13 Kotelnykova were Pozniaky (a boiler department, chemical water treat- commissioned and over 71 thousand of electrical ment department, pump department, technical water meters of residential consumers were replaced. supply department, heat engineering equipment startup and setup operations and a high-pressure gas pipeline). ST1 was subject to reconstruction and the construction of 110 kV ST1, Solomianska, Vokzalna and Mototsykletna was in progress. 113 heat power measuring units were installed.
27 Kyivenergo JSC. Annual report 2008 INVESTMENT POLICY AND PROJECTS
PREPARATION FOR EURO 2012 The main problematic matter in the years to come will be the preparation and holding of the final part of the The Company takes an active part in the preparation for EURO 2012 Football Championship. The construction the final part of the European Football Championship of new residential areas and hotel complexes, sports that will be held in Ukraine in 2012. In accordance with facilities, the underground facilities, recreation centers the State Target Program of Preparation and Holding and the engineering infrastructure will be increased for of the EURO 2012 Football Championship in Ukraine the purpose of a proper holding of the Championship. approved by the Cabinet of Ministers of Ukraine on All this will require new power supply sources. February 22, 2008, and amended by Decree of the Cabinet of Ministers of Ukraine No. 937 dated October The unavailability of the capacity reserve at 35% of 16, 2008, it is necessary to spend UAH 2.8 billion on 110 kV substations and on the main 110 kV transit the construction and reconstruction of facilities in Kyiv facilities has already resulted in a deficiency of electric for the purpose of a proper preparation and holding of power in the central, southern and western parts of the the championship. capital, in Podil, Pozniaky and Troyeschina areas, etc. In 2008, the Company began to perform operations This situation exists because of an unpredicted growth related to the feasibility study and included in the said of the electrical load caused by the absence of a new Program in connection with the projects of construc- General Plan of Development of Kyiv till 2020 and tion, reconstruction, and repairs of transmission lines, detailed plans of territories of some city districts which substations, and an open distribution device at Heat prevents a timely providing for the construction of new and Power Plant 5. power supply sources. The settlement of the land allotment matters is in progress. The Company has prepared suggestions DEVELOPMENT OF ELECTRIC concerning the initiation of a project entitled “Rehabili- tation and Development of the Electric Power Supply POWER SOURCES System of Kyiv” that provides for an external financing The Company will have to perform the following at the expense of a credit granted by the IBRD in the electric power networks development operations in total value of USD 239 million. All investment projects order to provide the Ukrainian capital with sources and included in the said project are aimed at the perfor- a reliable power supply: mance of the State Target Program of Preparation and Holding of the EURO 2012 Football Championship in construction of the 110 kV Yevropeiska, Universitetska, Ukraine. Mystetska, Olimpiyska, Yelenivska, Slavutych, Korchu- vatska, Post-Volynska, Lukiavivska, Brest-Lytovska, Moskovska and Vatutinska substations; CRITICAL MATTERS reconstruction of the 110 kV Pyrogivska, VUM, Voskre- senska, Vokzalna, Bortnychi and ST-1 substations and In 2008 like in 2007, the condition of the 110 kV electric the 35 kV Borthychi and Garnizonna substations; power networks of Kyiv was characterized by problems caused by the following factors: reconstruction of the 110 kV VRU at Heat and Power Plant 5 for the purpose of connection of Yevropeiska, absence of new 330 kV power supply sources in Kyiv; Mystetska and Slavutych substations. absence of new 110 kV transit facilities and a full load The power supply of the consumers located in the of the existing ones which makes it impossible to reach western part of the city that comprises several admi- the full capacity of Heat and Power Plant 5 and Heat nistrative districts remains extremely problematic be- and Power Plant 6; cause of the high load at the 330/110 kV Oktiabrska existence of blind substation power supply schemes substation and the 110 kV Severna – Irpin No. 1 and 2, which reduces the reliability of supplying power to Severna – Oktiabrska and Severna – Irpin No. 3 transit consumers; facilities. no capacity reserves in power supply sources of some In order to relieve the Oktiabrska – Severna substa- districts of the city. tion unit and to create a capacity reserve Kyivenergo has to build 4 two-circuit 110 kV transmission lines The said reasons and an insufficient rate of construc- from Zakhidna substation to 110 kV Bilychi, Lepse, tion of new electric power network facilities make it dif- Lukianivska and Post-Volynska substations. However ficult to settle the matters relating to the connection of the construction of the Zakhidna substation ordered newly erected buildings to the electric power networks by the Central Electric Power System of Ukrenergo and ensuring the reliability of the power supply in the National Energy Company is not performed because city. the plot necessary for the placement of this substation is unavailable.
Kyivenergo JSC. Annual report 2008 28 INVESTMENT POLICY AND PROJECTS
DEVELOPMENT OF HEAT POWER SOURCES INVESTMENT PROGRAM FOR 2009 The development of the heat power sources meets the The Company’s Investment Program for 2009 in the Plan of Provision of the Capital with Thermal Power for amount of UAH 124.3 million was approved by the 2005 and the current General Plan of Development of National Energy Regulation Commission on Decem- Kyiv till 2020. At present, one of the most problematic ber 23, 2008 under No. 1407. The following directions matters is the provision of consumers with thermal of the Program are financed: technical development, power in the area of Heat and Power Station 5 (which modernization, construction of electric power networks is the central part of the city) and Osokorky and Pozni- and equipment – UAH 90.4 million (72%); measures aky districts. It is possible to liquidate partially the defi- aimed at the reduction of excessive losses of electric ciency existing in the area of Heat and Power Station 5 power – UAH 23.2 million (18.7%); introduction and de- by commissioning of facilities at the ST1 and RK Poz- velopment of information technologies, communication niaky substations (the 1st stage of 200 Gcal/h and th and telecommunication systems – UAH 5 million (4%); 2nd stage of 3x180 Gcal/h) and shifting the load of ~ 65 purchase of vehicles – UAH 2.6 million (2.1%); provi- Gcal/h from Heat Network 4 of Heat and Power Station sion of tools, devices and diagnosis equipment neces- 5 to the RK Teremky. ST2 also requires reconstruction sary for the process – UAH 3.1 million (2.5%). and increase in the capacity.
CAPITAL CONSTRUCTION
2006 2007 2008 Sources UAH, thousand Own funds 75983 64052 95091 Including power generating unit No. 3 6734 1662 1110 Heat power meters fund 8344 3002 - Credit granted by the World Bank 230651 33171 14645 Credit granted Denmark 394 292 - City budget 40269 52557 50802 City budget of the previous years - - 1321 Subventions from the state budget - 15437
Total 355701 153074 177296 Assets commissioned 226505 129107 159718 Construction in progress 402804 426545 442921
29 Kyivenergo JSC. Annual report 2008 INVESTMENT POLICY AND PROJECTS
PROSPECTS OF DEVELOPMENT
In 2008, the rates of the urban development were high. erection of new 110 kV Yevropeiska, Mystetska, Olimpiyska, Slavutych, Korchuvatska, Post-Volynska, As of December 22, 2008, the maximum of the Vatutinska substations; electrical load was 1,845 MW as compared with 1,777 MW in 2007. The increase in the city’s maximum reconstruction of the 110 kV Moskovska, Pyrogivska, electrical load was 3.82% which figure was lower than VUM, Voscresenska, Vokzalna, Bortnychi ST1 substa- that of the preceding year because of the crisis eco- tions and the 35 kV Bortnichi and Garnizonna sub- nomic phenomena. stations; Kyivenergo will have to perform the following electric construction of new high-capacity 110 kV Universy- power networks development operations in 2008-2012 tetska, Yelenivska, Lukianivska, and Brest-Lytovska in order to ensure a reliable provision of Kyiv with substations instead of the existing 35 kV substations; electric power: reconstruction of 11035 kV VRP at Heat and Power construction of 4 110 kV two-circuit transmission lines Plant 5 and reconstruction of 110330 communication from the Zakhidna substation (Central Electric Power with a power supply of 110 kB bus-bars through System of Ukrenergo National Energy Company) to the separate switches on the side of AT1 and 2; 110 kV Bilychi, Lepse, Lukianivska and Post-Volynska reconstruction of ST1 accompanied with an increase substations. At the 1st stage the said 110 kV substa- in the heat power up to 800 Gcal/h and reconstruction tions will be built up to the existing networks of the Kyiv of ST2; power unit. completion of the construction of RK Pozniaky; continued construction of power generating unit No. 3 at Heat and Power Plant 6, completion of the reconstruc- reconstruction of the main and distribution heat net- tion of VRP330 and commencement of the construction works. of a 110 kV transit line between Heat and Power Plant 5 and Heat and Power Plant 6;
Kyivenergo JSC. Annual report 2008 30 SHARE CAPITAL
The Authorized Capital of Kyivenergo amounts to UAh 27,091,070; it is divided into 108,364,280 shares having the par value of UAH 0.25 each.
*Structure of Shareholders of Kyivenergo as of December 31, 2006
No. Shareholders category % in the Company’s Authorized Capital
1 Legal entities being Ukrainian residents 0,01838 2 Legal entities being non-residents of Ukraine 0,18654 3Natural persons 2,68782 4 Kyiv City Council 12,73339 5 Nominal holders including: 84,38245 5.1 Energy Company of Ukraine National 50,00 Joint Stock Company 5.2 Legal entities being Ukrainian residents 1,15882 5.3 Legal entities being non-residents of Ukraine 33,14138 5.4 Natural persons 0,07367
*Structure of Shareholders of Kyivenergo as of December 31, 2007
No. Shareholders category % in the Company’s Authorized Capital
1. Legal entities being Ukrainian residents 1,77939 2. Legal entities being non-residents of Ukraine 0,00332 3. Natural persons 0,05303 4. Kyiv City Council 0,18654 5. Nominal holders including: 97,97772
*Structure of Shareholders of Kyivenergo as of December 31, 2007
No. Shareholders category % in the Company’s Authorized Capital
1. Legal entities being Ukrainian residents 1,69532 2. Legal entities being non-residents of Ukraine 0,00332 3. Natural persons 0,00814 4. Kyiv City Council 0,18655 5. Nominal holders including 98,10667
*This information is set forth on the basis of the data received from Ukrnaftogaz Financial Company, a register keeper of Kyivenergo JSC.
31 Kyivenergo JSC. Annual report 2008 PROFIT AND LOSS STATEMENT
Accounting period, Preceding period, Item UAH, thousand UAH, thousand
Income (gain) derived from sales 7 099 445 5 533 618 (of goods, work, services) Value added tax 1 155 769 903 362 Excise tax Other deductions from income 21 82 Net income (gain) derived from sold products 5 943 655 4 630 174 (goods, work, services) Cost of sold products (goods, work, services) 6 332 855 4 860 922 Total: profit loss 389 200 230 748 Other operating incomes 607 669 423 123 Administrative costs 47 763 42 568 Distribution costs Other operating costs 372 661 93 368 Financial results of operating activities: profit 56 439 loss 201 955 Income derived from shareholding 1 330 Other financial incomes Other incomes 55 158 52 854 Financial costs 62 404 79 872 Losses caused by shareholding 1 398 Other costs 383 810 9 988 Profit (loss) caused by the influence of inflation on monetary items Financial results of regular activity before taxes: profit 20 763 loss 594 409 Tax on regular activity profits 6 578 Income derived from tax on regular activity profits 105 992 Financial results of regular activity: profit 14 185 loss 488 417
Kyivenergo JSC. Annual report 2008 32 PROFIT AND LOSS STATEMENT
Accounting period, Preceding period, Item UAH, thousand UAH, thousand
Extraordinary: incomes costs Taxes on extraordinary profit Net: profit 14 185 loss 488 417 Provisions for incentives
ELEMENTS OF OPERATING EXPENSES
Accounting period, Preceding period, Indicator UAH, thousand UAH, thousand
Expenditures 2 746 135 2 179 146 Expenses relating to wages 502 220 374 024 Social deductions 188 884 140 428 Depreciation 127 389 119 399 Other operating costs 297 277 145 568 Total 3 861 905 2 958 565
CALCULATION OF SHARE PROFITABILITY INDICES
Accounting period, Preceding period, Indicator UAH, thousand UAH, thousand
Average annual quantity of ordinary shares 108 364 280 108 364 280 Adjusted average annual quantity of ordinary 108 364 280 108 364 280 shares Net profit per one ordinary share -4,51 0,070 Adjusted net profit per one ordinary share Dividend per one ordinary share
33 Kyivenergo JSC. Annual report 2008 BALANCE SHEET
Beginning of the End of the accounting Assets accounting period, period, UAH, thousand UAH, thousand
I. Non-current assets Intangible assets: residual value 984 3323 original cost value 15592 19068 accrued depreciation 14608 15745 Construction in progress 433066 470842 Fixed assets: residual value 1569510 1638404 original cost value 3014757 3203617 wear and tear 1445247 1565213 Long-term biological assets: fair (depreciated) value original cost value accrued depreciation Long-term financial investments: recorded by the method of shareholding in 11520 10122 other enterprises other financial investments 7365 7365 Long-term receivables 262 222 Fair (depreciated) value of real estate owned for the 77 purpose of investment Original cost value of real estate owned for the purpose 91 of investment Wear and tear of real estate owned for the purpose of 14 investment Deferred tax assets 184273 346746 Goodwill Other non-current assets Total of Section I 2207057 2477024 II. Current Assets Stores 394100 383939 Current biological assets Unfinished products Finished products Goods 4416 6336 Notes received Trade receivables: net selling value 528900 663604 original cost value 1248619 1581696 doubtful debts reserve 719719 918092
Kyivenergo JSC. Annual report 2008 34 PROFIT AND LOSS STATEMENT
Beginning of the End of the accounting Assets accounting period, period, UAH, thousand UAH, thousand
Settlement receivables: State Budget 235 185 given advances 7497 778 calculated incomes internal settlements Other current receivables 10888 9317 Current financial investments Cash and its equivalents: national currency 70070 113552 foreign currencies 747 314 Other current assets 26188 122862 Total of Section II 1043041 1300887 III. Prepaid Expenses 4030 6341 IV. Non-current assets and mortality groups 1 Balance 3254128 3784253
Beginning of the End of the accounting Liabilities accounting period, period, UAH, thousand UAH, thousand
I. Equity Authorized capital 27091 27091 Share capital Additional invested capital Other additional capital 1339831 1294511 Reserve capital 54646 54646 Retained profit (uncovered loss) 26567 -421483 Unpaid capital Withdrawn capital Total of Section I 1448135 954765 II. Coverage of the future expenses and payments Provision for payments to personnel 175 16468 Other types of provisions Target financing Total of Section II 175 16468
35 Kyivenergo JSC. Annual report 2008 PROFIT AND LOSS STATEMENT
Beginning of the End of the accounting Liabilities accounting period, period, UAH, thousand UAH, thousand
III. Long-term Liabilities Long-term bank credits 578000 809672 Other long-term financial liabilities Deferred tax liabilities Other long-term liabilities 70193 Total of Section III 578000 879865 IV. Current Liabilities Short-term bank credits 252711 206953 Current debts under long-term liabilities 44280 70899 Notes payable Trade liabilities 188108 717917 Current settlement liabilities: received advances 266802 376546 State Budget 19268 75382 off-budget payments insurance 11943 10696 wages and salary 15722 21199 members 1557 1529 internal settlements Other current liabilities 143070 135905 Total of Section IV 943461 1617026 V. Prepaid Incomes 284357 316129 Balance 3254128 3784253
Kyivenergo JSC. Annual report 2008 36 AUDITOR’S OPINION
The auditors have audited the financial statements of Resolution of the State Committee for Securities and Kyivenergo Power Supplying Joint Stock Company Stock Market No, 69 dated January 31, 2008 “Approval of that include a balance sheet as of December 31, 2008, a Letter of Instruction Concerning the Scope of Issuers’ a profit and loss statement of the Company for 2008, Disclosure of Information of the Auditor’s Opinion to cash flow statement for the year that ended as at the be Published in an Official Printing and Placed in the said date, equity capital statement of the Company Generally Accessible Securities Market Information for 2008, notes to the annual financial statements, Database of the State Committee for Securities and description of important accounting policy aspects and Stock Market within the Regular Annual Information in other explanatory notes. Accordance with the Requirements of Sections V and VI of the Regulations Entitled “Disclosure of Information The audit was conducted in accordance with Contract by Issuers of Securities” approved by Resolution of the No. 909 made by Macauditservice LLC and Kyivenergo State Committee for Securities and Stock Market No. JSC on January 13, 2009. The audit began on January 1591 dated December 19, 2006 and registered with 13, 2009 and ended on March 12, 2009. the Ministry of Justice of Ukraine on February 5, 2007 The necessity of this work and the availability of the under No. 97/13364”. auditor’s opinion are stipulated in Law of Ukraine No. The audit was conducted in accordance with the 448/96BP dated October 30, 1996 “Securities Market requirements of the International Audit Standards, State Regulation in Ukraine” as amended and Law of namely IAS 800 “Auditor’s Opinion on the Fulfillment Ukraine No. 3480IV dated February 23, 2006 “Securities of Special Tasks”. According to these standards the and Stock Market”. When drawing up this opinion the auditors are to plan and conduct an audit for the purpose auditors followed the Regulation entitled “Preparation of obtaining a reasonable confidence that the financial of Auditor’s Opinions to be Submitted to the State statements do not contain material misstatements. Committee for Securities and Stock Market when The audit was conducted by testing the proofs of the Disclosing an Issuer’s Information and by Professional amounts and the information disclosed in the financial Members of the Stock Market” approved by Resolution statements. The audit also included an assessment of of the State Committee for Securities and Stock the applied accounting principles and the significance Market No. 1528 dated December 19, 2006, and the of the preceding estimates of the executive staff as well International Audit Standards that have been adopted as an assessment of the general presentation of the as national audit standards in accordance with Law financial statements. We believe that the conducted of Ukraine No. 3125XII dated April 22, 1993 “Auditors’ audit provides reasonable grounds for expressing the Activities”. The auditors also met the requirements of auditor’s opinion.
OPINION
In our opinion the financial statements represent the financial condition of the Company as of December 31, 2008, its profit and losses and the cash flow in the past year in a reliable manner in all material aspects and are drawn up in accordance with the National Accounting and Financial Reporting Standards of Ukraine that are not contrary to the international financial reporting standards in accordance with the Accounting and Financial Reporting Law of Ukraine.
37 Kyivenergo JSC. Annual report 2008 TABLE OF CONTENTS
Opening Statement of the Chairman of the Board 3 Organizational Structure of the Company 4 Main Functions of Branches and Detached Divisions 5 Supervisory Board 6 Board 7 Stages of the Company’s Development 8 Human Resources and Social Policy 11 Labor Protection 13 Social Policy 14 Awards and Decorations 15 Communication Policy 16 Electrical Power Engineering 18 Description of Electric Power Plants and Power Supply Networks 18 Meeting the Needs of the City 19 Tariffs 20 Heating Engineering 22 Description of Heat Sources and Heat Networks 22 Meeting the Needs of the City 23 Tariffs 24 Environmental Protection 25 Investment Policy and projects 27 Capital Construction 29 Prospects of Development 30 Share Capital 31 Profit and Loss Statement 32 Auditor’s Opinion 37
Kyivenergo JSC. Annual report 2008 38