RusHydro Pure Energy

HPP-based Power Industry Complexes – Grounds for Regional Development of

Togliatti, April 2013 Allocation of Hydropower Potential and Russian Economic Potential Development Percentage (billion kWh per year) RusHydro (billion kWh per year)

Approx. 30% developed 1009

993

Approx. 50% developed Approx. 3% developed

Approx. 20% developed

- Theoretical potential - Technical potential - Economic potential 2 Distinctive Features of Hydropower Industry

RusHydro

3 Constraints for Hydropower Industry Development in Russia RusHydro

Apart from their power generation function, the above facilities play an important role as water management and transport infrastructure facilities. Waterfront Reservoir Equipment PDS*

*Power distribution scheme 4 Increasing Financial Viability of HPP Construction in Russia

RusHydro

Use of generic Attraction of long-term money with low design solutions (especially for small HPPs) rate of return

Introduction on innovative technologies Optimization of project lifetime and high-tech equipment

Financing of CAPEX for HPP construction based on Public Private Partnership (PPP)

Investor State

Design engineering Construction of HPP buildings Construction of dam Purchase and water reservoir and installation of equipment Transport and energy Power distribution scheme infrastructure 5 Existing public co-funding mechanisms for construction of HPPs in Russia. RusHydro

Description Funding method

6 Potential public sources of financing HPP construction on PPP terms RusHydro Allocations from the Allocations from the Allocations from the Far East and National Welfare RF Pension Fund Zabaikalsky Krai Fund Development Fund

Far East and Zabaikalye Public managing Russian Ministry of Public managing Territory Development company VEB Finance Fund

Share in authorized Bonds of Russian Debt securities of legal capital or granting of emitters entities repayable loans

Potential scope Not defined of investments Over 1 tln. rub. Over 0.8 tln. rub. Existing RF Central Bank discount rate (8.25% per If deposited on VEB For 2011 – year) increased by 2% Rate of return accounts – up to 8% per appr. 6% per year per cent year

7 Cluster Approach – Instrument for Far East and Eastern Siberia Development RusHydro The following sectors need primary The Russian economy needs resources: mineral and primary resources •Energy sector with their upside deposits located •Transport and communications in the East of the country. •Aviation and shipbuilding industry •Space industry •Construction

HPP projects are the most important elements of integrated territory development (development of infrastructure and construction of major energy-intensive production and processing plants).

The Cluster approach encourages investors for implementing energy- intensive industrial projects.

8 HPP-based Industrial Complexes – Map Complexes under construction RusHydro  Priangarsky Complex (BEMO project) based on Boguchanskaya HPP and nonferrous industry plants (2006-2015)

 Northeast Complex based on Ust- Srednekanskaya HPP and gold mining plants (2008-2017)

 Priamursky Complex based on Nizhne- Bureiskaya HPP and ore mining, metallurgical, coal mining, transport, space and building material plants (2008-2016)

 Yuzhno-Yakutsky Complex based on Kankunskaya HPP (Tranche 1 of Yuzhno- Yakutsky HPC), ferrous and petrochemical Anticipated Complexes plants (2008-2025)  Nizhne-Yeniseisky Complex based on Nizhne- Kureiskaya HPP  Kamchatka Complex based on newly  Zabaikalsky Complex based on Mokskaya HPP commissioned units of Mutnovskaya and Ivanovo HPP (Tranche 1 of Vitimsky HPC), ore Geothermal Power Plant and gold mining mining and metallurgical plants plants (2010-2013) 9 Economical Effect from Implementation of Power Industry Projects RusHydro

ControlSlowdown of of local local power price price / tariff / tariff growth growth rates and capacitiRemovales of existing system constraints for rates and capacitiesfor regional for consumers regional power transmission and marketing on the consumers domestic and external markets

Potential for integrated development of remote territories due to creation of HPP- Encouraging active growth of regional based industrial clusters power consumption

For investors Higher investment prospects and synergic effects from industrial cluster concentrations Access to power and other necessary infrastructures Business and regional expansion 10 Priangarsky Complex (BEMO project) based on Boguchanskaya HPP and Boguchansky Aluminum Smelter RusHydro Boguchanskaya HPP Summary: Project objective: Construction of Boguchanskaya HPP and Boguchansky Krasnoyarsky Region, Kezhemsky District, Location Aluminum Smelter constitutes the basis of the public town of Kodinsk, River investment project “Integrated Development of Nizhneye Priangarye” and pursues the objective of Completion as of 31/12/2012: ensuring energy safety of the Siberian IPS and further Project phase BoHPP – 95 % development of natural and resource potential in the BoAS – 49 % northern part of the Region. Number and 3 units each rated for capacity of units 999 MW

The project is implemented on PPP basis. Federal Budget 2,997 MW (BoHPP) and budget of the Krasnoyarsky Region fund the activities for Installed power/ Output preparing for impoundment and constructing life supporting 600 ktpa of aluminum (BoAS) social, transport and power infrastructure. Years of 2012-2013-2014 (BOHPP) commissioning Boguchansky Aluminum Smelter Boguchanskaya HPP (Krasnoyarsk Region) (Krasnoyarsk Region) RusHydro / RUSAL RUSAL / RusHydro

11 BEMO Project Outcome

PureRusHydroEnergy Construction of Boguchanskaya HPP will allow safe power supply of Siberian power system consumers and bring momentum for the development of the entire Nizhneye Priangarye.

In 2012 all planned activities aimed at commissioning 1,998 MW capacities of Boguchanskaya HPP were completed.

Development of grid infrastructure: - New 301 km long 220 kV PTL is constructed. - New 500 kV PTL longer than 500 km is under construction. - New 330 km long 500 kV PTL is to be constructed. - Large substation with adjacent grids to enhance reliability of power transit between the Irkutsk Region, Krasnoyarsky Krai and Taishetsky Aluminum Smelter power system was constructed.

The first bridge over the Angara in the Krasnoyarsky Krai was opened in the Boguchansky District. This will contribute to the development of Nizhneye Priangarye and Evenki deposits.

Large investment projects in the energy, ore-mining and wood-using industries are further planned. 12 Northeast Complex based on Ust-Srednekanskaya HPP and Natalkinskoye gold ore deposit RusHydro Ust-Srednekanskaya HPP Summary: Project objective: Magadan Region, Srednekansky District, Construction of Ust-Srednekanskaya HPP in the Magadan Location Region will help to solve the issues related to power settlement of Ust-Srednekan, Kolyma River supply of new OJSC Polyus Gold gold ore deposit. Project phase Completion as of 31/12/2012 – 46.36%

Number and The investment project implemented by OJSC Polyus Gold is 4 units each rated for 142.5 MW interrelated with the Ust-Srednekanskaya HPP project in capacity of units terms of electricity power generation and consumption and commissioning dates. Installed power 570 MW JSC RusHydro and OJSC Polyus Gold are planning to enter a Years of bilateral contract. 2013-2017 commissioning Matrossov Natalkinsky Ore Mining and Ust-Srednekanskaya HPP Concentrating Plant (Magadan Region) (Magadan Region) RusHydro Polyus Gold

13 Effect from implementation of Ust-Srednekanskaya HPP project

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Energy safety and self-sustainability of the region: •Supply of economically feasible electrical power to new ore mining companies extracting gold and other precious metals, in particular, Matrossov Natalkinsky Gold Ore Mining and Concentrating Plant •Supply of electrical power to consumers of the Magadan Region Central Power System and partially consumers of the Oimyakon District •Enhance winter energy efficiency of Kolymskaya HPP in cascade mode

Encourage investments into industry for Magadan Region economy upgrading

Ensure integrated approach to downstream Enhance population living standards and issues, including navigation employment, reduce population outflow and improve social situation in the region Enhance budgetary tax revenues of all tiers

14 Priamursky Complex based on Nizhne-Bureiskaya HPP and Ore- mining, Metallurgical, Coal-mining, Transport and Space Industry Plants RusHydro Nizhne-Bureiskaya HPP Summary: Project objective: Amur Region, Bureisky District, The objective is to put in place a power industry complex Location within the Amur Region, Jewish Autonomous Region and settlement of Novobureisky, Bureya River southeast of the Republic of Sakha (Yakutia). Project phase Completion as of 31/12/2012 – 12 %

Number and Preliminary sales contracts executed for electricity and 4 units each rated for 80 MW capacity of units power generated by the plant with JSC AK Transneft, JSC Managing Company Petropavlovsk, JSC Mechel and Installed power 320 MW agreement on electricity and power sales cooperation with Federal Space Agency. Years of 2015-2016 commissioning Industrial facilities under construction: Transneft, Petropavlovsk, Mechel, Roskosmos Nizhne-Bureiskaya HPP (Amur Region) RusHydro

15 Effect from implementation of Nizhne-Bureiskaya HPP project

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Supply of electrical power to industrial facilities under construction within the Amur Region, Republic of Sakha (Yakutia) and Jewish Autonomous Region (Garinsky and Olekminsky iron ore mining and concentrating plants, gold ore mining and concentrating plants (Pioner, Malomyr, Albyn, Sotur, Tokur, Pokrovka), Kimkano-Sutarsky mining and metallurgical plant, ESPO export pipeline, Vostochny space launching site, Elginskoye coal deposit)

Provide infrastructure for economic development of the Amur Region and multiplying effect for the Russian economy

Reduce population outflow from the Far East Enhance budgetary tax revenues of all tiers

Create new jobs Slowdown tariff growth

Ensure integrated approach to various Ensure utilization of Russian capacities downstream issues, including navigation 16 16 Mechanisms of Investment Return during Implementation of HPP Projects

17 Conclusions

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18 RusHydro

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