RAO UES urges government to guarantee long-term gas supplies

Among the main difficulties of attracting investments for the Russian energy sector are the level of prices for electricity that does not always let a project pay back to a private investor, and the uncertainty of long-term gas supplies, RAO UES Deputy CEO Sergey Dubinin said at a conference organized by the Adam Smith Institute today.

According to Dubinin, the draft of a decree on providing investment guarantees that was submitted to the government in August 2003 suggests giving to private investors (the winners of a corresponding tender) guarantees of long-term gas supplies from Gazprom or independent gas producers.

Dubinin added that in 2006 to 2007 some regions of Russia might sustain a sizeable deficit of electricity. The development of the competitive electricity market will send prices spiraling down, which, in turn, will trigger the shutdown of electricity generating facilities that prove to be inefficient. In this event, given growth in electricity consumption, the deficit may cause a sharp turnabout in prices. This is why investment decisions on building additional electricity generating facilities should be made in advance, Dubinin stressed.

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