Financial summary
| $ million (unless otherwise stated) |
2009 |
2008 |
| Sales revenues1 |
238 |
156 |
| Average tariff price (KZT/kWh) |
3.19 |
2.42 |
| Domestic sales |
3.30 |
2.59 |
| Export sales |
2.78 |
1.59 |
| Average cost1 (KZT/kWh) |
1.54 |
1.72 |
| EBITDA (excluding special items)1 |
120 |
42 |
| Capital expenditure1 |
61 |
39 |
| Sustaining |
17 |
4 |
| Expansionary |
44 |
35 |
Revenues
Revenue for 2009 represents Kazakhmys Power’s
first full year under Kazakhmys’ ownership
during which sales benefited from electricity tariff
increases in Kazakhstan and Russia, but were
negatively impacted by low sales volumes in the
first half of 2009 due to the economic downturn. The
revenues, as presented in US dollars, were also
negatively impacted by the tenge devaluation in
February 2009.
The average realised electricity price for Ekibastuz
GRES-1 in Kazakhstan rose from 2.79 KZT/kWh in
January 2009 to 3.58 KZT/kWh in December 2009. The
strength in demand in Kazakhstan during the second
half of the year enabled the power plant to raise
prices and grow sales volumes at the same time,
assisted by the recovery in industrial production,
reduced supply from competitors, and upgrade of the
transmission lines giving access to new customers.
The average electricity tariff price achieved in the
year, as shown in the table above, includes sales to
Russia at rates below those in Kazakhstan.
Approximately 20% of sales volumes are exported to
Russia, however in 2009, there were no export sales
in the first two months due to extended price
negotiations.
Kazakhmys Power’s revenues of $238 million
included $29 million from the Maikuben West coal
mine from sales to residential and industrial users.
Third party coal sales volumes decreased by 33% due
to the downturn in electricity demand in Russia
compared with the prior year. Coal prices for sales
to third parties remained largely unchanged from
2008.
EBITDA (excluding special items)
Almost 90% of Kazakhmys Power’s EBITDA is
generated by Ekibastuz GRES-1. Due to the
challenging marketplace in the first half of the
year, Kazakhmys Power’s EBITDA by the end of
June 2009 was only $41 million, compared to the
second half EBITDA of $79 million, driven by higher
sales volumes and prices.
The coal used by Ekibastuz GRES-1, largely sourced
from the nearby Bogatyr mine, forms the main
operating cost of the power plant. Coal prices at
the start of the year were 10% above those in 2008.
During the year, Bogatyr raised prices further and
Ekibastuz GRES-1 began purchasing varying grades of
coal to keep the average cost down. To further
control costs, Kazakhmys Power took a number of
actions in 2009 including carrying out repair and
maintenance work internally and implementing
projects to improve the efficiency of the power
plant.
The majority of Kazakhmys Power’s operating
costs are denominated in tenge and therefore
partially mitigated the impact of the tenge
devaluation on revenue when reported in US dollars.
Average cost
The cash cost per kWh of electricity decreased by
10% in 2009 due to the measures taken to control
costs. Coal costs comprise approximately 49% of all
cash costs; the remaining 51% is made up of
transmission costs, emission taxes, fuel, water,
labour, repair and administrative costs.
Capital expenditure
Sustaining
Sustaining capital expenditure in 2009 related to
work at Ekibastuz GRES-1 to maintain and improve the
operational efficiency of the existing units. This
annual maintenance work was mainly carried out over
the summer period with short-term outages. At the
Maikuben West coal mine, replacement equipment was
purchased in order to fulfil the targeted level of
stripping works at the mine and to maintain the
mine’s railway network.
Expansionary
The overhaul of Unit 5 to modernise the unit and
improve operating efficiency commenced in April 2009
and was successfully completed with the unit
recommencing operations in November 2009. The
overhaul has increased Unit 5’s gross
dependable capacity from 430 MW to its nameplate
capacity of 500 MW. A new electrostatic precipitator
is also being fitted on Unit 5, with its
installation to complete in June 2010, avoiding
outages during the peak winter period.
Preliminary work was also conducted on the
rehabilitation of Unit 8 during 2009. The
rehabilitation programme will involve the
replacement of the majority of Unit 8’s
components to bring the dormant 500 MW unit into
production by 2013. The recommencement of Unit 8
will increase Ekibastuz GRES-1’s total
available generation capacity to 3,000 MW by 2013
and enable Ekibastuz GRES-1 to benefit from the
forecast growth in sales tariffs and power demand in
Kazakhstan.
The two other dormant units are scheduled to be
restored following Unit 8. Once the dormant units
have been refurbished, the plant will operate at its
nameplate capacity of 4,000 MW. The expansion
programme is dependent upon the achievement of
tariff increases in future years.
The modernisation programme also includes a number
of environmental improvements to the power plant,
with the installation of electrostatic precipitators
on all units to reduce ash emissions to
international benchmark standards and improvements
to ash disposal systems.
In 2010, capital expenditure will be mainly focused
on the rehabilitation of Unit 8. An overhaul of Unit
3 will also be conducted as part of the programme to
overhaul each unit at Ekibastuz GRES-1 every five
years. The last overhaul on Unit 3 was performed in
2005.
