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President of Russia Vladimir Putin: Mr Shulginov, let me start by congratulating you on your appointment to the post of director of one of Russia’s biggest energy companies. In the hydroelectricity sector, this is probably one of the biggest companies in the world.

This all makes for a lot to manage, but you have long experience and have spent your entire life working in the energy sector. I hope that you will put your experience, skills and knowledge into taking the company further. This company holds a very important place in our country’s energy sector. There are problems of course, but also clear positive moments and obvious achievements made over recent years. The company has big plans for the future, very ambitious development plans.

I therefore congratulate you on this appointment and look forward to seeing your effective and energetic work.

Chairman of the Board and General Director of RusHydro Nikolai Shulginov: Thank you. Let me take this opportunity to thank you for placing such great trust in me. I hope to live up to your expectations. Of course I am ready to put my utmost effort into this work, otherwise I would not have agreed to such a serious offer. You are right: the company has very ambitious and important tasks ahead, tasks of national importance. We will need to work hard.

As far as my first impressions go, we are working now on developing a debt refinancing mechanism for RAO Energy Systems of the East [Energeticheskiye Sistemy Vostoka], as you instructed. These debts on loans and borrowing were inherited from Background information INTER RAO UES (OAO) RAO UES. Part of the debt arose because of an economically unjustified pricing policy that made it impossible to cover the costs of investment and repair programmes. The pricing policy made it possible to cover only the costs of routine operation and emergency repairs. Now, substantial debts have accumulated creating a heavy burden.

To address this situation, as you instructed, we have developed a mechanism by which RusHydro will organise an additional share issue, VTB bank will buy these shares, and the money obtained will be used to pay off the debts. Our other task is to consolidate assets of RAO Energy Systems of the East.

This mechanism will be effective if the state authorities are willing to provide state guarantees for at least part of these debt liabilities of RusHydro and its subsidiaries. I hope that you will give this plan your support.

The draft order has been drawn up and is currently going through the approvals process in the Government before being submitted to you. It makes provisions for all of these aspects, including the very important matter of drafting programmes on growth of company value, which is essential for investors today.

Regarding our current tasks, the company and its branches are getting ready for the autumn-winter season.

As for our construction projects, in accordance with your instruction, we are working on four projects to build heating and power stations in Amur Region, Khabarovsk Territory, on Sakhalin, and in Yakutia. This work is underway and keeping us busy.

We have made progress in Blagoveshchensk, where we are building a second unit of the Blagoveshchensk heating and power station. I think that we will be able to start launch facility operation for sure this year. As for the rest, I expect it will be ready in 2016–2017. We have received some criticism regarding the construction project’s organisation and delays incurred, but I think that here, we need to make a close examination of each individual case. We need dialogue in this respect and must take into account technically justified objective circumstances. In this way, we can find the right solutions and settle on our deadlines, after all, it probably would not be for the best to hand over facilities that are not yet fully complete just for the sake of bringing forward the deadlines.

Vladimir Putin: It would not be good at all.

Nikolai Shulginov: Yes, on the contrary, it would create dangers and risks for the energy system’s proper operation.

Overall, RusHydro’s task is to guarantee facilities’ reliable operation and safety. As we know, failure to comply with the rules leads to serious accidents and technological disasters. We know this well and this is why we are carrying out our campaign [to ensure safety and reliability] and are implementing our innovation and modernisation programmes. We need to step up this work and we will do this.

Regarding other construction projects, projects scheduled for this year, we completed work on the 100-MW Gotsalinskaya hydroelectric power station in Daghestan on October 1.

I have also already had the chance to fly with Mr Deripaska [general director of RUSAL] to the Boguchansky plant. This [the Boguchanskoye Energy and Metals Complex] is probably the first such private-public partnership. We switched on the Boguchanskaya heating and power station in December. You did a remote launch of operations at the first power generators. I know that Oleg Deripaska invited you, and we, as equal partners in this project, also invite you to the plant’s opening in October, if your schedule allows.

Vladimir Putin: Good, thank you.

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