The EBRD today committed to provide a long-term loan of 8 billion roubles (the equivalent of €192 million) to fund balance sheet optimisation of RusHydro's subsidiary in Russia’s Far East region despite adverse market conditions.
The 10-year loan for this state-controlled company, the world’s second-largest hydropower generator, was agreed after maturities on local capital markets shrank dramatically due to the current financial turbulence.
The EBRD funding will enable RusHydro to push ahead with a planned restructuring of a recently acquired subsidiary, OJSC Energy Systems of the Far East (ESV).
RusHydro will use the loan to refinance ESV’s short-term debt as part of a major corporate restructuring which will include the unbundling of the company’s electricity networks from its generation capacity.
ESV was up until now, one of the few state power assets to have remained untouched by a broad-ranging reform of the sector carried out in the last decade. The EBRD played a prominent role in this reform process, investing close to €1.5 billion in the sector over the last 10 years.
"We are glad to support RusHydro, a long-standing client of the Bank in these challenging times. This 10-year facility clearly demonstrates the Bank's continuous commitment to the Russian power sector and we hope that our contribution will help develop the Far Eastern energy system," said Nandita Parshad, Director, Power and Energy Utilities at the EBRD.
RusHydro’s overhaul of ESV aims to improve productivity by bringing operating performance up to the highest Russian and international standards, including in terms of energy efficiency and reducing power losses.
OJSC RusHydro, which accounts for 12 per cent of Russia’s installed electricity-generating capacity, has been a client of the EBRD since 2006. The state owns a 58 per cent stake in the company.
In 2010 the EBRD supported RusHydro’s debut eurobond placement, taking up 22.5 per cent of a five-year rouble bond launched by the company, the first such instrument issued by a Russian power sector company. RusHydro’s CEO, Mr Dod commented: "We are very pleased to see support from our long-term partner, the EBRD, and welcome their engagement in the Far Eastern project."