Russian power producers cut growth on weak demand

* Private power firms cutting 2009 expansion by 65 pct

* Demand fell 6.7 pct in Q1 y/y - EnergyMin

* Minister says 2020 goals firm, though delays possible

MOSCOW, April 27 (Reuters) - Russia’s private electricity producers will install about 65 percent less power capacity in 2009 than was planned before the financial crisis caused a slump in the power demand, the deputy energy ministry said on Monday.

However, Energy Minister Sergei Shmatko said overall plans to expand capacity by 2020 remained the same.

Russia needs the capacity over the long term. The country needs 8.5 gigawatts (GW) of new power capacity by 2012, largely to replace old and inefficient turbines, and the government’s 2020 target is to expand by more 120 GW.

Deputy Minister Vyacheslav Sinyugin told an industry conference that privately owned power generators were expected to bring on line 1,627 megawatts (MW) this year instead of the 4,634 MW laid out in the General Scheme for the sector’s development to 2020.

“Our inquiries revealed that the plans are far from being met,” Sinyugin said.

The government and industry had assumed when preparing the the General Scheme, which was approved in February 2020, that electricity consumption would continue growing by several percent per year, as it had during much of Russia’s economic boom of the past decade.

However, the global economic downturn has forced major consumers of power, such as metal companies, to idle production, cancelling the need for such rapid growth in power production, officials at an industry conference said.

Minister Shmatko told the forum that demand for power would be significantly less this year than in 2008, with consumption already down 6.7 percent in the first quarter, year-on-year.

The Market Council, an industry regulator, has forecast a 9 percent demand slump this year.

“The new paradigm of development in the sector will not be what it was before,” Shmatko said. “Massive construction of generating capacity is not appropriate.”

“We must do everything to ensure that our demands correspond to reality, and do not place excessive financial strain on these companies (building capacity),” he said.

Deputy Minister Sinyugin said that state-controlled electrical companies were sticking to expansion plans. They are set to install 2,039 MW, just slightly less than the 2,046 MW that had been agreed.


Speaking to reporters on the sidelines of the conference, Minister Shmatko repeated the ministry’s position that power companies must eventually honour their commitments to build new turbines as laid out in the General Scheme.

“All of the investment programmes must be fulfilled. All of the new generation must be built, because a large part of the technology has passed its lifespan and in three to five years we may end up with decayed machines,” Shmatko said.

However, he said the ministry was willing to discuss amendments to the scheme to delay or to relocate construction.

“We are ready to discuss with generating companies their difficulties,” Shmatko said. “We understand their serious shortage of money, and changes to the General Scheme are therefore possible. We are ready to move the pieces around on the chessboard.” (Writing by Simon Shuster; editing by Karen Foster)