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9 Apr, 2009 18:25

State plugs power sector capacity expansion

The government has cut 40% from its investment program for state-owned companies in the electricity sector. But it’s urging generators to keep up the pace of electricity capacity expansion over the next three years.

Invest at all costs. Power generators must stick to the scheme of building new capacity despite falling demand. Prime Minister Putin pointed out that the crisis should not derail a $52 billion investment program into power generation.

"Today in a time of crisis, the demand for electricity is falling. Many regions even have reserves. But of course this is temporary. The recovery of economic growth is impossible without the development of power generation, modernization of outdated equipment, and building new power plants.”

Many generators, however, are struggling to raise money to finance projects, and have asked the government for help. The state has offered aid – but Energy Minister, Sergey Shmatko, says it’s not for everyone.

“State-owned companies that operate electricity distribution networks, hydro power generators and atomic power generators will get state support. For example MRSK, which owns a distribution network, will get 500 million dollars in state guarantees to attract credits.”

Experts say this help is crucial, as state-owned companies account for 80% of the overall investment program in the power sector. Another 20% or roughly $20 billion should come from private generators that hope the government will help them, too.