Rosseti : Budargin: “Integration” and “consolidation” which ROSSETI is actively dealing with most common words within the SPIEF 2015”

Oleg Budargin, Rosseti (Russia's power grid) General Director was interviewed by Russia 24 TV channel at the St. Petersburg International Economic Forum. He pointed out that Rosseti signed an agreement with South Korea's KEPCO on the construction of the Vladivostok-Seoul power bridge. Other results of Rosseti's activities at the SPIEF 2015 are given in the transcript of the interview.

CORRESPONDENT: We have invited the head of Rosseti to our discussion platform. Good afternoon, Oleg Budargin! Thank you for your time and decision to visit our studio for the interview. The most important question that we probably ask all companies at this Forum: what agreements you have already signed? What are the expectations? Some words about planned meetings.

OLEG BUDARGIN: Good afternoon. Thank you for the invitation. Our team like all other Russian big companies is actively involved in the discussion of topical issues from the first minute of the Forum.

We work on the development of the Russian grid infrastructure as well as the development of the whole electrical energy industry. Of course, our international cooperation is also on the table.

If we talk about specific projects the Tomsk region's authorities, for example, suggested us to consolidate electrical networks and create a new concept of the development of the regional power grid infrastructure. Tomsk is of great interest for both our Company and some manufactures that implement their projects within its territory. Our colleagues from Gazprom are very active there with the realisation of the gas pipeline 'Altai' project. Therefore, building of new electrical networks is under discussion as they will allow not only to increase the reliability of the Urals and Western Siberia as well as the Tomsk region's power grid but will also to ensure power supply of such a large project as the 'Altai'.

Very serious negotiations are being held with KEPCO. We have been in talks with this company for more than 3 years and here at the St. Petersburg International Economic Forum we have finally signed an agreement with them. It was the initiative of our Korean partners. In fact, this is an integration project for building a power bridge that connects power system of the Russian Far East with Seoul (about 1 000 km of transmission lines).

A joint working group will start pre-project study, projecting which will determine the needs for volumes to be transmitted to South Korea, connection points, consumption points. Today the project is relevant as never before. No wonder the concepts of 'integration' and 'consolidation' are now the most common words heard here, at the St. Petersburg International Economic Forum.

Just a couple hours ago we've signed an agreement with the National Union of Vegetables Producers. Our partners have set very ambitious goals: to increase the production of vegetables and hothouses by 2 000 ha. Thus, they will plan to increase the production by 1 mln 500 thd units of vegetable products. And this requires electrical power. We concurred, signed the agreement and are ready to provide the partners with a reliable electricity supply. Maybe 4 GW is a small amount but this is a sample of distributed generation located throughout Central and Southern Russia. We realize the importance of production of domestic food and we, of course, will meet our partners' requirementsto create the necessary conditions for the development of Russian agricultural producers.

CORRESPONDENT: Is anything else planned? Tomorrow or maybe the day after tomorrow? By the way whoever I was talking with all the time we come to food safety. I was also quite surprised to hear that the producers of fruits and vegetables contacted you right here. I'll make just one brief remark that in fact this is a litmus test: the regions where power grid develops, the industries on which electrical networks spread their influence are on the march. And vice versa: industries are developing, power grid is growing.

OLEG BUDARGIN: Indeed, where the consumption grows, where there is a need for the development of the power grid infrastructure - this becomes an indicator of economic growth, area development. In this case quality of planning is very important. Today our Company faces the problem of improvement of the quality of planning. We must and will do that together with our colleagues - we will synchronize our plans and those of our subsidiaries with the programs of territorial development of Russian regions. This is a very important point.

If to speak of our future work within the Forum, I must note that the German concern E.ON has shown interest in the modernization of the power grid of the Kaliningrad region and offered its opportunities in terms of participation in the modernization of small generation. I think, moreover absolutely confident, we will sign an agreement with them on the modernization of the power grid operated by our subsidiary Yantarenergo.

Negotiations on the active participation of Schneider Electric in the development of manufacturing modern equipment in Russia are being held. They have quite a wide geography of production: new facilities are launched not only in the Urals but also on the banks of the Volga river.

We will go on with a very interesting project the implementation of the first element of Smart Grid - 'smart' meters. Till 2020 in Europe up to 80%of installed electricity meters will be 'smart'. They not only measure the amount of the consumed electric energy but they also are a part of the future electricity consumption planning system. So, while 'smart' meters will soon take 80% in Europe, in Russia unfortunately only 7 percent of consumers have such metering devices. Today, together with the Russian Direct Investment Fund and Rostec Corporation we are talking about launch the production of such meters in Russian and engage Russian companies in producing modern electrical equipment.

When we talk about imports phase-out in Rosseti we think not only about the substitutionbut in general about production of modern Russian equipment for the needs of the Russian poer grid.

For example, we still use overhead wires, in fact, designed in Soviet times, the so-called aluminium and steel wires. We need a modern one. So, we ask Russian manufacturers to provide Rosseti for the state-of-the-art wires. Those have 20 percent higher performance, their weight is 50% less, electricity losses are close to zero. Moreover, because it is lighter, hence less supports are required.

And the most important thing we have deep concern about is icing of the wires. In other countries which install modern wires there's no such problem. I wish our partners could get us and arrange modern wires production in Russia. Moreover, we involve Rostec Corporation to assist us and they seem to be quite active with this task solution.

CORRESPONDENT: If we talk about Rosseti: we all remember Russian power grid thorough reorganisation two years ago. You're quite young team. Are you satisfied with the results Rosseti reached?

OLEG BUDARGIN: The consolidation of the state-owned power grid assets and the establishment of the Rosseti Group were aimed not only at the implementation of acentralized management system unified technological process which had always been unified (power transmission from the generation to the consumer) but to ensure the reliability, availability, trust and efficiency.

Of course, we could've done more and better. Nevertheless I'm confident that our team (it's worth mentioning that Rosseti Group employs more than 200 thousand people) met the key challenges. Our main indicator is reliable power supply to consumers. So, for two years we have reduced the number of power system disturbances by 25 percent, electricity losses by 4 per cent. Operating expenses - as an indicator of our Company's performance -reduced by 14 percent.

Consumers' confidence is equally important for the Company. And for us a 34 percent increase in the number of customers connected to our networks means trust from our customer's side. We are no monopolists. We have rivals. And the fact that the consumer chooses electrical services of Rosseti tells its own story.

We have a lot to do. Our goals are quite complex. For instance, we feel the idea of consolidation comes under resistance. Still, despite all the obstacles I'm sure we'll manage to find solutions to every task. There are goals to establish uniform rules of behaviour in the Russian power grid, single technology, single technical policy.

Of course, our most promising, our most important goal is a new architecture, a new philosophy of forming of the country's power grid. The tasks of modernization and improving reliability of electric grids must be dealt with on the basis of such a modern ideology as Smart Grid.

CORRESPONDENT: Mr. Budargin, unfortunately, the time of our interview is over. Thank you very much.

OLEG BUDARGIN: Thank you. Taking this opportunity, I'd like to express our gratitude to all our partners, our colleagues. We have not lost anyone of them in the past couple of years. We only increase the number of our partners every year. We do not count only on long-term policies and not only on long-term investment but also on long-term partners. Thanks again for forming such an atmosphere around our Company.