PRESS: RusHydro board to mull joining RUSAL’s plant construction

MOSCOW, Apr 12 (PRIME) -- Russian hydropower giant RusHydro’s board of directors will consider participation in construction of aluminum giant UC RUSAL’s Taishet Aluminum Smelter on April 19 after a strategy committee has discussed it, Kommersant business daily reported on Wednesday quoting sources.

The participation plan includes creation of a special purpose vehicle with RUSAL to raise U.S. $1.1 billion project financing, of which about $200 million will be spent to compensate RUSAL’s historic costs. Sberbank, Gazprombank, and Vnesheconombank (VEB) may grant the loan at 7.75% at the investment phase of the project and at 7.25% at the operating phase, Kommersant said.

RusHydro will have to buy 50% in the SPV for $288 million with part of the sum compensated by RUSAL’s purchase of 42.75% in the Irkutsk power grid company for $88 million. RusHydro also wants to be free from guaranteeing liabilities under VEB’s loan on the Bogushanskaya hydropower plant, the business daily said.

The Taishet plant’s capacity is seen at about 430,000 tonnes of aluminum per year with the first stage’s capacity reaching 215,000 tonnes. Finalization of the plant’s construction will cost $700–800 million, sources told the business daily.

RusHydro sees construction of the second stage of Boguchansky aluminium smelter more profitable than the Taishet plant.

Taishet’s net present value will be positive only if aluminum prices at the London Metal Exchange grow by at least 2 percentage points above a long-term consensus forecast, if power prices in Siberia grow by at least 6%, if capital expenditures of the project do not skyrocket, and if the project financing accounts for 65% of the project’s costs, Kommersant reported.

The baseline scenario for the plant’s development sees power prices in Siberia rising only 3%, and then RusHydro may receive 10 billion rubles of losses from the plant, while construction of the second stage of the Boguchansky aluminium smelter will bring it 3.7 billion rubles of profit even under these conditions.

According to the business daily, the Energy Ministry also thinks that RusHydro’s participation in construction of the Taishet aluminum smelter may have a negative impact on the company.

(56.9552 rubles – U.S. $1)

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