ADVANTAGES OF ROSATOM SOLUTIONS AND RISK MANAGEMENT «HANHIKIVI-1» CASE STUDY

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1 ADVANTAGES OF ROSATOM SOLUTIONS AND RISK MANAGEMENT «HANHIKIVI-1» CASE STUDY Mscw, 10 June 2014

NPP «Hanhikivi-1» in Nrthern Finland Vendr ant technlgy: Rsatm is the exclusive turnkey EPC-cntractr f the prject Sharehlders f the prject cmpany «Fennvima»: 44 Finnish

f Fennvima 23 May 2014 STUK has submitted a Preliminary Safety Assessment cncerning prject Start f cnstructin wrk - 2018 Cmmercial peratin date - 2024 Mankala structure: All

2 NPP «Hanhikivi-1» in Nrthern Finland Vendr ant technlgy: Rsatm is the exclusive turnkey EPC-cntractr f the prject Sharehlders f the prject cmpany «Fennvima»: 44 Finnish industrial and municipality-wned cmpanies and Rsatm (34%) Prject timetable: 13 February 2014 Envirnmental Impact Assessment Reprt was cmpleted 27 March 2014 Rsatm acquired 34% f Fennvima 23 May 2014 STUK has submitted a Preliminary Safety Assessment cncerning prject Start f cnstructin wrk Cmmercial peratin date Mankala structure: All prduced electricity will be sld t sharehlders f Fennvima at cst Cmpetitiveness: With target average Mankala price less than 51/MWh (in nminal terms) ver Pyhäjki

Key prject strength Finland is nuclear friendly cuntry with high level f Public Acceptance f nuclear technlgies Prven and cmpetitive Russian technlgy Strng and balanced sharehlding

3 Key prject strength Finland is nuclear friendly cuntry with high level f Public Acceptance f nuclear technlgies Prven and cmpetitive Russian technlgy Strng and balanced sharehlding structure Mankala structure prviding ptimal risk diversificatin amng sharehlders and pen-ended full recurse EPC cntract with fixed price prvides prtectin frm cst verrun and delay risk 3

Mankala ur first wrd in Finnish Frecast Finnish Nrd Pl electricity prices prvides the prject with very healthy margin Rsatm integrated slutin allws t attain Mankala price at highly cmpetitive level

4 Mankala ur first wrd in Finnish Frecast Finnish Nrd Pl electricity prices prvides the prject with very healthy margin Rsatm integrated slutin allws t attain Mankala price at highly cmpetitive level Mankala structure and strng frecast electricity demand in Finland guarantee stable sales f electricity prduced Frecast Mankala price and Market electricity price, eur/mwh Dmestic electricity cnsumptin, TWh 140,00 120,00 100,00 80,00 60,00 40,00 20,00 0,00 Operating csts Debt service Mankala price Depreciatin Market Electricity price

5 Rsatm integrated slutin Optimal financing structure f the prject: t raise funds frm varius surces at cmpetitive rates Prject realizatin based n «Alliancing» High level f mutual cntrl in the prject during all stages: frm initial design t decmmissin Mutual guarantees f supply f cmplete life-cycle prducts and services Investments in knwledge and human capital: persnnel training, R&D, exchange f NPP perating experience 5

Express valuatin based n reprt fr Eurpean Cmmissin Express valuatin based n reprt fr Eurpean Cmmissin Stages f express valuatin Billin eur, ex VAT 6,6 5,4 4,5 4,8 5,0 4,0 5,1 4,1 1 2 3 4 5 6 7

Single unit NPP slutin increases cst per kw n 5% 4. Greenfield site increases cst f cnstructin n 10% 5. Minus cst f wnership 17,5% 6. Cst escalatin annual rate 2% during 2012-2023 7.

6 Express valuatin based n reprt fr Eurpean Cmmissin Express valuatin based n reprt fr Eurpean Cmmissin Stages f express valuatin Billin eur, ex VAT 6,6 5,4 4,5 4,8 5,0 4,0 5,1 4, ,0 1. Cst f serial NPP (1175 MW) in Eurpe is abut 4 billins eur in 2012 prices 2. Finnish legal requirements increases cst f cnstructin n 20% 3. Single unit NPP slutin increases cst per kw n 5% 4. Greenfield site increases cst f cnstructin n 10% 5. Minus cst f wnership 17,5% 6. Cst escalatin annual rate 2% during Range accuracy (-20%;30%) EPC cntract value range with inflatin price escalatin can be between 4.1 and 6.6 billin eur 1. William D. D haeseleer, «Synthesis n the Ecnmics f Nuclear Energy», Study fr the Eurpean Cmmissin, DG Energy, Final Reprt,

«Alliancing»: new apprach t prject realizatin Objective: risk management and additinal value creatin Slutin: new prcess f business rganizatin Organizatinal and ecnmic slutins Technlgical slutins

7 «Alliancing»: new apprach t prject realizatin Objective: risk management and additinal value creatin Slutin: new prcess f business rganizatin Organizatinal and ecnmic slutins Technlgical slutins Technical innvatins System f guarantees Insurance Cperatin with internatinal cnsulting cmpanies Practive risk management Participatin f nn-wners in prject margin Supply chain rganizatin and cntrl Cnstructin slutins «Just in time» principle Overcming restrictins Reductin f installatin time Installatin pssibilities(pen tp) Optimized specificatin f turbgeneratr and machine rm equipment Waste management technlgies Autmated prcess cntrl system 7

Risk management: technlgical risks Prven technlgy Turn key EPC cntract with fixed price, date certain and payment upn delivery Lng term fuel supply and service agreements Scpe fr change

8 Risk management: technlgical risks Prven technlgy Turn key EPC cntract with fixed price, date certain and payment upn delivery Lng term fuel supply and service agreements Scpe fr change rders is limited and well defined Significant technical and design/ permitting wrk perfrmed t date Detailed analysis f the lessns f OL3 Mnitring f wrk perfrmed n daily basis Insurance cverage 8

Finnish gvernment Gvernment and public supprt f nuclear

9 Risk management: plitical risks Fennvima applied fr supplementing f Decisin-in- Principle granted in 2010 by Finnish gvernment Gvernment and public supprt f nuclear industry Sharehlder agreement restrictins n Rsatm t becme majrity sharehlder 9

10 Risk management: financial risks Superir credit features f the Mankala structure Strng credit quality f sharehlders Uncnditinal, irrevcable cmmitment frm sharehlders t cntribute their equity Significant amunt f equity financing Financial supprt frm the Russian Federatin 10

11 Risk management: market risks Mankala structure means full transfer f risks with respect t price, vlume and cst f electricity frm the prject cmpany t sharehlders The market price n average are expected t be higher than Mankala price 11

Attractive rate f return n investment fr sharehlders Financials f the prject, mln eur 2 500 10 000 1

Equity, left sc. NWF, left sc. Other lans, left sc. FCFF, left sc.

12 Attractive rate f return n investment fr sharehlders Financials f the prject, mln eur (500) (1 500) (5 000) (2 500) Cumulative FCFF, right. sc. Revenue, left sc. Equity, left sc. NWF, left sc. Other lans, left sc. FCFF, left sc. (10 000) 150% 100% 50% Financing structure f the prject 0% Equity NWF VEB-ECA Cmmercial banks 12

13 Investment attractive business mdel with high level f risk cntrl Strategic nature f the prject t Russian and Finland with high level f supprt in bth cuntries Multiplying effect in bth cuntries: industrial rders new jbs taxes Shift frm prfit center f EPC-cntractr t prfit center f BOO sharehlders Raising funds frm varius surces at cmpetitive rates Mankala price ver is expected t be highly cmpetitive vs. frecast Finnish electricity prices which makes the prject investment attractive fr sharehlders 13

14 THANK YOU! JSC «RUSATOM OVERSEAS» June,

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