The board of directors can announce that it has approved the latest revisions to the current investment program, originally due to be instigated between 2020 and 2024, which should result in Rusneftegaz increasing investments to exceed pre-pandemic margins of expenditure. The initial plan was suspended during the first six months of the crisis, and was ultimately altered significantly twelve months ago to accommodate reduced cash flows. When such changes were instigated, management believed it was necessary to mitigate the costs of the health emergency via reductions in spending, with such decisions being made at a time when there was no foreseeable end to the pandemic. Another major factor considered by the board was the delay of various works, due to both postponements and cancellations in 2020, in addition to the announced reduction in spending, indicated that the fulfillment of the five-year program was highly improbable. However, a further review has now been completed, accounting for significant changes in circumstances since the previous assessment, with management electing to postpone a formal announcement of any approved changes until the preferred resolution could be confirmed. It was believed that an announcement would be made late last year, but the board elected to defer decisions until all aggravating and mitigating circumstances could be analyzed accordingly. This included the cessation of severe medical restrictions afflicting our operations, and also the accumulation of significant cash reserves as a consequence of the prudent preservation of capital during the prior two years. In response to this statement, our Deputy Chief Executive Officer, Aleksandr Filyurin, delivered the following remarks:
“I am very pleased that we are able to announce that our investment program is to resume. After we announced that remote working was to end a few weeks ago, it is sensible to do all we can to return to the normality of the pre-pandemic world. We have a lot of big plans for the future, and the delays of the last few years have done a lot to try and sabotage them. To be direct with you, it is vital for the long-term prospects of Rusneftegaz that we complete all these plans to be best of our ability. From a personal perspective, I would like to thank my fellow board members for giving their support to the revised version of this plan, and also to our shareholders who are prepared to increase the funds invested in this company to help us complete the time to its original schedule. I believe that together, we will all be able to make this work, and we will all prosper because of it.”
Under the latest version of the investment program, we will now expend a similar amount of funds to the values projected in the original version of the plan, albeit in an expedited manner. For example, certain projects that previously would have been organized concurrently will now be arranged simultaneously where possible, although the realization of specific constituents of the strategy will be delayed until after the next formal investment proposal is finalized in 2024, and not all schemes will be completed by the end of the current program. Under the latest version, key tenets of the original plan are retained, including the expansion of our international trading office to commence global commodities trading, and a budget allotted to further pursue the international expansion of our energy division with the acquisition of additional power generating capacity. The majority of funds will nonetheless, continue to be directed to the renewal of existing production assets, although management has resolved to prioritize the purchase of equipment and services deriving from the Russian Federation. Any questions regarding this announcement should be directed via email or telephone. We necessitate your cooperation and understanding with this matter.
