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19 Nov, 2009 09:35

RusHydro to oversee reconstruction of Boguchansk hydropower plant

RusHydro to oversee reconstruction of Boguchansk hydropower plant

Russian Energy Minister, Sergei Shmatko, has told the Federation Council that Russian renewable energy giant, RusHydro, will oversee the repair and overhaul of the Boguchansk Hydroelectric Station.

Shmatko stated that talks with aluminium giant, Rusal, had resulted in agreement that Rushydro should oversee the project, with cost overruns also covered by RusHydro, with all parties agreeing that rapid progress in the wake of the August accident that badly damaged the damn and hydro power plant was needed.

"We are speaking of the need for the swift completion of the Boguchansk hydropower plant, especially following the accident at the Sayano-Shushenskaya plant."

Three hydropower units are expected to be installed before the end of 2010, with both Rusal and RusHydro responsible for completion and investment totaling 54.93 billion Roubles. The station is expected to be achieving design capacity of 3,000 megawatts, in 2012.

Shmatko’s announcement eased concerns about the project stemming from long standing disagreements between RusHydro and Rusal, estimating that it would require a further 33.8 billion Roubles to finish the plant.

"The cost for completing construction has been virtually agreed. I don't think there will be substantial changes in financing volumes. However, the cost of a number of items might be revised upward and
others downward."

Other issues clouding the relationship have included the engagement of subcontractors, and financing shortfalls. Shmatko noted that talks between the two over the management of the projects remain in progress.

“The two companies have also worked out a number of procedures for more effective management of the project, including those that don't involve the "two-turnkey" approach.”

Aleksey Soloviev, Vice President at IFC Metropol declared the resolution reflected a focus on the technical scope and needs of the project, which fall within RusHydro’s area of expertise.

“I think, this decision is quite logical. First, the management of the project company in the frame of building hydraulic works is without any doubt more the specialization of RusHydro than of Rusal. The decision also seems to be more comfortable for the specialized departments and ministries, especially after the latest events in the hydroenergy sector. And, finally, it’s almost for sure that RusHydro, implementing technical management of the project company, will coordinate all its strategic decisions, including those principally important for other parts to the project, with them. The practice of such project companies working proves the latter.”

Metropol Senior Analyst, Sergey Beiden, also noted that although subsequent phases of the project, involving development an aluminium plant, reflect the expertise of Rusal, the immediate focus was on restoring power generation from Boguchansk

“In this situation transferring control over to Rushydro seems like a logical step. Because of the accident at the Sayano-Shushenskaya hydro-electric power plant the expeditious launch of the Boguchansk station is an important step in covering the deficit in the Siberian energy system, despite the delay in construction of the aluminum plant – the second element of the BEMO project. Four turbines have already been delivered to the station, and the plan of supplying power into the energy system will be able to cover energy production by the station, according to the timeline. Because of that, the BEMO project has shifted its focus, and currently the emphasis is on constructing the hydro-electric plant, transferring control over the construction to Rushydro looks legitimate.”