14 February 2007 – Head of Russian state power utility Unified Energy Systems (RAO UES) Anatoly Chubais has presented a $118 billion investment plan designed to boost supplies over the next five years, as the country faces a surge in demand.
RAO UES is seeking to attract $15bn of investment this year to help build new power stations and revamp aging equipment. All of this must come from private investors, Chubais said, because in energy production, “the less the government involvement there is, the better.”
The state will still hold major sway, however. State-owned Gazprom announced last week that it would pool its electricity assets with SUEK, the nation’s biggest coal producer. The resulting holding company will control at least 25 per cent of the country’s power production, an Aton Capital research note said.
Responding to the Gazprom-SUEK venture, Chubais said, “State capitalism is a dead end,” referring to the Kremlin’s policy of keeping a tight grip on the private sector. Last year, demand grew 4.2 per cent, more than twice what UES was equipped to handle, resulting in power shortages to hundreds of industrial clients in Moscow during winter.
Recent forecasts say demand will continue to grow by an annual five per cent until 2010, meaning that about 41 000 MW of new capacity will have to be built over the next five years, almost twice what Russia has achieved since the collapse of the Soviet Union.
These facts have forced UES to abandon its earlier $81 bn investment program. “That was clearly not enough to meet demand,” Chubais said. “We desperately need more capacity.”
Twenty power generating companies will by spun off from UES over the next two years. These will account for about 15 percent of the money needed to bring on line new capacity, more than 60 000 MW of it over the next 10 years.