АКЦИОНЕРНОЕ ОБЩЕСТВО «РУСАТОМ ОВЕРСИЗ»

Rosatom Financial Solution for NPP

Financing models and risks

Discussion Materials

Accra Meeting

November 17, 2017

THE STATE ATOMIC ENERGY CORPORATION “ROSATOM”

Table of Contents

2

1 NPP financing «go or no go» decision 3 – 4

2 Financing models 5 – 12

3 Project Financing consideration 13 – 17

4 Comparison of Implementation and Financing Arrangements 18 – 20

1. NPP financing «go or no go»

decision

NPP financing «go or no go» decision1

4

Main challenges

• The magnitude of funding

requirements ~ 5-6 bln $ per Unit

• Front-loading of costs incurred:

>2/3 of total lifetime costs before

the COD*

• Long construction period – up to

10 years

• Long periods needed to recoup

the original costs ~ 13-17 years

after COD

Main benefits

Each investor benefit:

• 60-year stable positive cash flow

stream

• Low operational costs per 1 MW,

high margin (50-70%)

• Can be interesting for institutional

and private investors after COD

Particular investor benefit:

• Diversification of base generation

- no dependence on fossil fuel prices

Accept Reject

* total lifetime costs means discounted CAPEX and OPEX of the NPP

1. All figures are based on the international experince and Rosatom general market knowledge and assumptions

2. Financing models

Financing models consideration

6

Model 1 Sovereign financing

Model 2 Corporate financing

Model 3 Project financing

Model 1. Sovereign Financing

7

Wholesale

Project Company

Host Country

Retail

EPC Contractor Payments

Electricity sales Revenue stream

Revenue stream

EPC contract

Ownership

Optionally to include

NPP life-cycle

contracts:

- Fuel supply

- O&M services

- Spent fuel treatment

Model 2. Corporate model

8

Wholesale

NPP Owner – Large Utility

Debt providers

Retail

EPC Contractor

Electricity sales Revenue stream

Debt repayment

Debt

drawdown

Payments

EPC contract

Optionally to include

NPP life-cycle

contracts:

- Fuel supply

- O&M services

- Spent fuel treatment

Model 2. Corporate model with Project company

9

Wholesale

Debt providers

Retail

EPC Contractor

Electricity sales Revenue stream

Debt repayment

Debt

drawdown

Payments

EPC contract

Project Company

NPP Owner – Large Utility

Debt guarantees

Ownership

Optionally to include

NPP life-cycle

contracts:

- Fuel supply

- O&M services

- Spent fuel treatment

Model 3. Project Financing Fundamental approach from the NPP perspective

10

Wholesale

Debt providers

Retail

Electricity sales Revenue stream

Debt repayment

Debt

drawdown

Project Company

Obtaining licenses and permits

Project management

Fund raising

Debt repayment, dividend payout

Contract execution

Operation

Decommissioning and waste disposal

Contractor

EPC contract

Fuel supply contract

Spent fuel treatment

Operation & maintenance contract

Host Country Consortium New investors

>50.1%

equity ownership

< 49.9%

equity ownership

Model 3. BOO as a Particular Case of Project Financing Fundamental approach from the NPP perspective

11

Wholesale

Debt providers

Retail

Electricity sales Revenue stream

Debt repayment

Debt

drawdown

Project Company

Obtaining licenses and permits

Project management

Fund raising

Debt repayment, dividend payout

Contract execution

Operation

Decommissioning and waste disposal

Contractor

EPC contract

Fuel supply contract

Spent fuel treatment

Operation & maintenance contract

Host Country Consortium

>50.1%

equity ownership

< 49.9%

equity ownership

Financing Model Implementation Experience

12

Corporate

Model

Project

Financing

Sovereign

Financing • Already implemented: Russia, China, India, France

• New-build projects: Belarus, Egypt, Bangladesh

Never actually happened for NPP yet

• State owned companies: Russia, France, UAE

• Private companies: Germany, South Korea, US

Why?!

3. Project Financing consideration

Standard terms of project financing

Major financing sources

14

Equity in amount not less than IDC + 30% of OCC

Commercial loans

Unique terms of project financing:

No recourse to sponsors for the Project Company obligations

Instrument for lenders’ risk mitigation – PC pledged assets

Single source of repayment - PC operational cash flow

NPP financing «go or no go» decision1 Main challenges

15

Main challenges

• The magnitude of funding

requirements ~ 5-6 bln $ per Unit

• Front-loading of costs incurred:

>2/3 of total lifetime costs before

the COD*

• Long construction period – up to

10 years

• Long periods needed to recoup

the original costs ~ 13-17 years

after COD

Accept Reject

* total lifetime costs means discounted CAPEX and OPEX of the NPP

1. All figures are based on the international experince and Rosatom general market knowledge and assumptions

16

LICENSE RISKS

Nuclear Power Project Risks

SITE RISKS

POLITICAL RISKS

NUCLEAR LIABILITY

RISKS

OPERATIONAL RISKS

PROJECT MANAGEMENT

RISKS

PROJECT COMPLETION

RISKS

Protection Tools

SOVEREIGN GUARANTEES

SPONSOR GUARANTEES

Key risks for private

investors Key risks for financial

institutions

NPP financing «go or no go» decision Main Risks

Model 3. BOO as a Particular Case of Project Financing Enhanced approach from the NPP perspective

17

Wholesale

Debt providers

Retail

Electricity sales Revenue stream

Debt repayment

Debt

drawdown

Project Company

Obtaining licenses and permits

Project management

Fund raising

Debt repayment, dividend payout

Contract execution

Operation

Decommissioning and waste disposal

Contractor

EPC contract

Fuel supply contract

Spent fuel treatment

Operation & maintenance contract

Host Country Consortium

>50.1% equity

ownership

< 49.9% equity

ownership

Host Country Sovereign guarantee Sovereign guarantee

Sovereign guarantee

Site

Transmission

Host Country

4. Comparison of Implementation and

Financing Arrangements

19

Comparison of Implementation and Financing Arrangements General terms

BOO Implementation +

Project Financing (Enhanced)

EPC Implementation +

Sovereign Financing

Very high, even with ECA-support Low

HOST COUNTRY

GUARANTEES

• Financial guarantees for: investors,

lenders, ECAs.

• Guarantees for the SPV: ETL, sales, site,

nuclear liability

In the amount exceeding

the intergovernmental loan

ELECTICITY TARIFFS AND

SALES VOLUME Secured electricity tariffs and guaranteed

sales volume sufficient to secure

investment returns

No extra cost for the consumer

REAL LIFE EXAMPLES Turkey, Finland Egypt, Hungary,

Bangladesh, Belarus

BORROWING COSTS

FUNDRAISING Availability of funds depends on

government constraints

Probably lack of funding

20

Comparison of Implementation and Financing Arrangements Sharing of Project Risks

BOO Implementation +

Project Financing (Enhanced)

EPC Implementation +

Sovereign Financing

Operator, Shareholders Operator, Government

Operator + Government Operator + Government

OPERATIONAL RISKS

NUCLEAR LIABILITY RISKS

Shareholders and/or Guarantor Government

Shareholders and/or Guarantor Government

Government Shareholders and/or Guarantor PROJECT COMPLETION

RISKS (INCL. POLITICAL, LICENSE ETC.)

PROJECT MANAGEMENT

RISKS

FINANCIAL RISKS