© 2018 SE NNEGC Energoatom

All rights reserved

ADDRESS BY ENERGOATOM PRESIDENT

DEAR COLLEAGUES, PARTNERS AND FRIENDS!

In 2017, Energoatom cemented its leadership role in the energy sector. We provided clean electricity to Ukraine, ensured the highest level of safety, implemented our corporate social responsibility strategy, and pursued the United Nations Sustainable Development Goals. Our second non-financial report, which is now presented to you, details the company’s achievements in 2017 and our future plans.


Generating the energy future of Ukraine, SE NNEGC Energoatom promotes sustainable economic development of the nation. As in previous years, we remain the leading power generating company accounting for over 55% of the total electricity produced in Ukraine. We are committed to our financial obligations: in 2017, Energoatom ranked 8th among the TOP 10 biggest domestic taxpayers and made a significant progress by improving production, management and procurement processes. In particular, the Company joined the Memorandum of Cooperation in the ProZorro.Sales project and saved UAH 481.9 million in procurements. Our success was recognised by ProZorro Awards: Energoatom won the nomination "The customer of the year that saved the most money".


Last year marked the start of a prominent project for Energoatom and the entire country, Construction of the Central Spent Fuel Storage Facility. Together with us, Ukraine made an important step towards the energy independence from the Russian Federation. Moreover, our negotiations and a due diligence by the Bank of America in 2017 paved the way for U.S. investment in Ukraine and helped issue $250 million fixed-rate bond securities in the U.S. capital markets with OPIC’s political risk insurance. Energoatom received one of world’s highest credit ratings (Moody’s rated Energoatom Aa2) and a very lucrative interest rate of 6.83% for raising funds for the of the Central Spent Fuel Storage Facility project. Such a rate is a record for Ukraine’s debt instruments that raise funds in international capital markets.


In 2017, we took great efforts to diversify the sources of nuclear fuel supplies for our NPPs and increase the safety, operational efficiency and reliability of nuclear power plants.


The Company understands that only highly skilled employees can guarantee safe, effective and efficient operation of nuclear power plants. Our numerous measures for employee upskilling are widely recognised. Another milestone was a launch of a matchless full-scale simulator of a VVER-1000 reactor with more than 43 laboratories for personnel training at Zaporizhzhya NPP. We are happy to express our gratitude to our European Commission partners for the financial support of this project.


We continue our active dialogue with local communities. In particular, Energoatom defended its initiative to extend operation of power unit No. 3 at Zaporizhzhya NPP for ten years (after modernisation) at important public hearings.


YURIY NEDASHKOVSKY
President of SE NNEGC Energoatom

The biggest challenge in 2017 was the tariff rate for electricity generated by NPPs, with the tariff remaining the world’s lowest. The last year’s tariff for nuclear power generation was 3.4 times lower than the tariff for thermal power generating companies and 1.2 times lower than the tariff for hydropower plants. This is in conflict with the global practices where the difference between tariffs for NPPs and TPPs is below 30% and the tariff for HPPs is usually lower than the one for NPPs. Today the tariff for electricity generated by nuclear power plants is critically low, failing to cover basic needs and adversely affecting not only the development programmes, but also social initiatives of the Company (in particular, housing programmes for employees).


As to our plans for 2018, despite all the challenges, we are set to focus on current development projects such as Ukraine-EU Energy Bridge, construction of the Central Spent Fuel Storage Facility and new nuclear power facilities (power units No. 3 and No. 4 at Khmelnytska NPP), as well as on renewable energy sources: four pilot solar power plants at NPP sites. We have strong intentions to increase the safety and efficiency of our NPPs, engaging leading companies and partners from Ukraine, EU, United States, Japan, etc., as well as to cement the reputation of Energoatom as an innovative company, which makes a significant contribution to the development of Ukraine’s fuel and energy sector and to the energy security of the EU countries. We continue to develop as an efficient and modern enterprise responsible to our employees and all stakeholders. We do everything we can to ensure the sustainable development of Ukrainian energy sector, economy and society.