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RusHydro’s Zubakin Says Won’t Borrow at Current Interest Rates

Vasily Zubakin, the acting chief executive officer of Russian state-run hydropower utility OAO RusHydro, comments on new borrowing plans and cost savings on construction materials.

RusHydro, which seeks to list depositary receipts in London this quarter, plans to almost double its power capacity by 2030 as Russia seeks to ease its reliance on natural gas.

Zubakin made the remarks yesterday in an interview in Moscow.

On a new financial model since the crisis:

“In the fourth quarter we completely simplified our financial management. We stopped new borrowing at the bank and stopped going to the market. And instead, we decided to keep the money in the bank.

“We’ve had to delay payments to subcontractors, squeeze all costs. No Russian utility has slashed staff like we have, by 17 percent. These measures have allowed us, without any new borrowing, to carry out our investment program. We have had to freeze the construction of just one power plant, in Dagestan.

“Now, we can afford not to go to the bank or the market to borrow at prohibitive rates. Our total debt to earnings before interest, tax, depreciation and amortization ratio is 0.8.”

On renegotiating loan coasts:

“Because we’re not borrowing now, it makes it easier to defend against creditors who are trying to raise the rates. They are telling us that the rates in the market have changed. We can tell them: We’re not borrowing at those new rates. Which defends the effectiveness of our investment projects.”

On cost savings in construction:

“We operated an odd system in that we made all of our own concrete at construction sites since we had the factories to do it. This wasn’t fashionable. It wasn’t modern. It would have been more correct to delegate this work to subcontractors. But, when cement prices started to fall, RusHydro got all the upside. We’ve saved, literally, billions of rubles.”

One billion rubles equals $29.4 million.

To contact the reporter on this story: Yuriy Humber in Moscow at

To contact the editor responsible for this story: Simon Casey at

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