Dear Shareholders!

In 2015, PJSC Kubanenergo continued to implement a number of major investment projects. The Company was focused on the development of the power grid infrastructure on the Black Sea and Azov Sea coasts of the Krasnodar Territory.

In 2015, the Board of Directors of PJSC Kubanenergo held 27 meetings. Key questions examined during the meetings were the confirmation of strategic documents and ensuring of regular control of the Company management.

In order to develop and reinforce control functions the improvement of such systems as risk management system, systems of internal control and audit was determined by the Board of Directors as a priority direction of the Company.

This approach allows to focus all efforts on improving the efficiency and effectiveness of the Company’s activity, the integrity of assets, the reliability and timeliness of accounting (financial) and other reports, the compliance with legal requirements and local regulations of the Company and ultimately contributes to achieve the set goals and objectives.

The Company’s share on the regional market for electricity transmission in 2015 made up 70.4 % (of the regional GRG). Total value of the electric power supply to the grids amounted to 25.5 bn kWh, which is more significant than the previous year level. 

Chairman of the Board of Directors PJSC Kubanenergo Y.N. Mangarov

The high rates of reconstruction and renovation of the power grids of PJSC Kubanenergo, as well as the dynamic growth of technological connections to the Company’s grid, suggest that in the future the Company will retain a dominant position in the regional market for electricity transmission. 

The development of the Sochi Energy Region was still the subject of focused attention. In 2016, it is planned to begin a large scale reconstruction of 110 kV Tuapse-City SS.

The south-west of the Krasnodar Territory presents another development area where the Novorossiysk Industrial Zone is being created. Furthermore, PJSC Kubanenergo reconstructs supply centers of coastal cities.

In the framework of the International Investment Forum Sochi-2015 PJSC Kubanenergo and the Administration of the Krasnodar City municipal entity  signed an agreement on the construction of two new 110 kV substations Bridge and Angarskaya in the regional capital.

During the reporting period, PJSC Kubanenergo ensured reliable and uninterrupted power supply to the consumers. Planned values​of the provided services reliability set by the regulating authorities – Regional Energy Commission – Pricing and Tariff Department of the Krasnodar Territory, were achieved. An average duration of works on supply restoration in case of technological failures connected to the interruptions in power supply to consumers dropped by 8.58 %, the accidents quantity dropped by 43.1 %.

Taking into account dynamic development of the Kuban Region the most important activity of PJSC Kubanenergo remains timely and accessible technological connection of new consumers to the power grids. In 2015, the Company concluded 29,500 agreements for technological connection, ensuring the record capacity of 718 MW.

During the reporting period, the power grids of the Company were joined by the electric facilities of such major Applicants as LLC Oboronenergo (21 MW), LLC RN-Tuapsenefteprodukt (11.3 MW), LLC Yeysk Thermal Power Plant (17.46 MW), LLC Gazprom Invest (7.6 MW), JSC Commercial Sea Port of Sochi (5.9 MW), OJSC Verkhnebakansky Cement Plant  (56 MW).

Under the energy efficiency program PJSC Kubanenergo continued to implement innovative projects carried out both by the Company’s own funds and by attracting investors to improve the quality of electricity transmission and metering.

PJSC Kubanenergo is one of the first companies in OJSC Russian Grids that privately raised the added capital to the development and improvement of the energy supply metering. In 2015, the Company concluded 12 energy service agreements with total borrowings over 2.3 billion Rubles. Expected impact of their implementation by 2019 will exceed 700 million kWh. Several agreements for 0.3 billion Rubles with the planned impact of 73.8 million kWh are at the signing stage.

PJSC Kubanenergo’s main goal for 2015 is an accident-free passage of the seasons of peak loads, timely receipt of a certificate of readiness, implementation of investment and maintenance programs and minimizing excessive losses. Taking into account increasing demands for electricity and growing loads it’s no less important to address the issue of increasing accessibility and transparency of grid connections, and the reliability and quality of services provided.

Chairman of the Board of Directors
PJSC Kubanenergo                                                                                                         Y.N. Mangarov