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RusHydro Group raised a claim against Ingosstrakh regarding the incident at Zagorskaya PSPP-2

RusHydro Group (ticker symbol: MOEX, LSE: HYDR; OTCQX: RSHYY) represented by JSC Zagorskaya PSPP-2 and JSC ESCO UES raised a claim against Ingosstrakh Insurance Company in the amount of RUB 106 mn, the sum of the insurance compensation for the incident at the Zagorskaya PSPP-2 that took place on September 17, 2013.

The investigation conducted by the experts allowed to determine the exact amount of damage, but the experts’ opinion on some issues was different, which caused legal actions. Ingosstrakh is one of three insurers of the Zagorskaya PSPP-2. Construction and assembly risks of the plant were insured by Ingosstrakh and AlfaStrakhovanie, property and equipment – by SOGAZ. Earlier, SOGAZ and AlfaStrakhovanie recognized the incident at the Zagorskaya PSPP-2 as the insurable event. Currently, the parties are determining the amount of compensation tranches.

The incident at the Zagorskaya PSPP-2 took place on September 17, 2013. At 22:57 the shift on duty noticed that the turbine room is getting filled with water. At this moment 15 employees have been working on the site. All of them left the building in an organized manner and nobody got injured. In the few following hours the turbine room and the adjacent area have been partially flooded. The primary survey of the site showed that the powerhouse has subsided and water came in through the deformation joints and intakes of half-finished water pipes. Further exploration, including with the help of drilling, identified caverns, formed by washout of soil. These caverns were immediate cause of the subsiding. Two inquiry commissions – one formed by Rostekhnadzor (the Federal Service for Ecological, Technological and Nuclear Supervision) and another by RusHydro – have studied the incident. Market Council allowed RusHydro to move the start of the Zagorskaya PSPP-2 capacity supplies to 2017 (the first stage) and 2018 (the second stage).

The Zagorskaya PSPP-2 with project capacity of 840 MW and four 210 MW hydropower units is being constructed near Zagorskaya PSPP already in operation. The second stage of the Zagorskaya PSPP is constructed to eliminate the lack of flexible demand management capacity in the Center of Russia (according to System operator’s estimates the lack of capacity in the region amounts to 2.5-3.0 GW, including 1.5 GW in Moscow region) as well as to prevent from emergencies in Moscow and Moscow region.  

The information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of RusHydro. You can identify forward looking statements by terms such as "expect," "believe," "anticipate," "estimate," "intend," "will," "could," "may" or "might," the negative of such terms or other similar expressions. We wish to caution you that these statements are only predictions and that actual events or results may differ materially from these statements. We do not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, general economic conditions, our competitive environment, risks associated with operating in Russia, rapid technological and market change in our industries, as well as many other risks specifically related to RusHydro and its operations.
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