Oblenergos’ tariffs suffer from crisis

Yesterday the National Electricity Regulation Commission revised downward the distribution and supply tariffs and 2009 investment programs for non-private Oblenergos. According to the NERC, this was done to decrease retail electricity tariffs. The revised 2009 investment programs are 2%-14% smaller than initially adopted, and 4%-28% smaller than programs in 2008. Alexander Paraschiy: The yoy reduction in tariffs will allow for saving 1.3% of the final electricity price, which seems to be too low for the country. Still, the reduction will be material for Oblenergos’ EBITDA. As we highlighted in our July 2008 report on Oblenergos, changes in Oblenergos’ investment programs directly affects their reported EBITDA. The yesterday’s correction decreased aggregate 2009 investment programs of Oblenergos by 13.7% yoy. If the Oblenergo sector does not find extra income sources this year, its aggregate reported EBITDA (in local currency) would fall by about 18% yoy and net income by 30% yoy.

Yoy change in Oblenergos’ investment programs

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SMEN  16%   TOEN   -6%   VOEN  -12%   HAON  -15%
KION   0%   SOEN   -9%   KIEN  -13%   ZOEN  -16%
ZHEN   0%   CHEON -10%   PREN  -13%   DNON  -20%
KREN  -4%   HMON  -12%   ENUG  -13%   CHON  -21%
HOEN  -5%   VIEN  -12%   LVON  -13%   CHEN  -23%
POON  -6%   ZAON  -12%   DOON  -13%   ODEN  -28%
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