OREANDA-NEWS. March 25, 2010.Vice PM Igor Sechin announced that the reconstruction capex for Sayano-Shushenskaya HPP (SSHPP) in 2010 will amount to RUB14.4bn (USD 480m), out of which RUB3.5bn will be spent on the shore spillway and RUB10.9bn – on reconstruction of the HPP itself and launch of new turbines. Also, yesterday it was announced that the second turbine at Sayano-Shushenskaya HPP started operating. Currently two of the least damaged turbines at the HPP have been relaunched, and the plant’s working capacity amounts to 1,200MW. By the end of the year another two turbines are expected to be back up and running.

The earlier forecast of the 2010 reconstruction capex for SSHPP amounted to RUB16bn (USD 530m), and we use this figure in our DCF model for the company. The newly announced figure is 10% lower, and furthermore represents a 1.6% cut in RusHydro’s overall 2010 capex. Our sensitivity analysis shows a potential 0.3% upside to our TP. We expect a slightly positive reaction in RusHydro’s stock from this news, although we reiterate that it remains to be seen whether the company’s new management will be able to deliver on these new promises. The launch of second turbine is in line with management’s guidance provided last month.