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18 Jul, 2008 08:07

Rising materials costs push ESPO price tag up

Construction costs for the multi-billion dollar East Siberia – Pacific Ocean pipeline are to rise again.

Speaking to RT, Transneft President Nikolay Tokarev, cited rising materials costs and the significant rise in metals prices as being key factors.

Primarily it's due to metal prices. We managed to buy all the supply we needed for the first stage of construction before the wild jump in prices. Metal prices will influence the second stage – pipe prices will increase by 100% by the end of the year and we'll have to alter our budget for the second stage of construction. In the first stage we expect financial factors to influence costs. Our credit contract with Sberbank means our credit costs can rise. We expect this. The growth will not be linear. It will be 1.5 to 2% on some of the money we have borrowed.