Russia's RusHydro Plans to Build Four Hydropower Plants in Kyrgzstan

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Researched by Industrial Info Resources (Sugar Land, Texas)--OAO RusHydro (Moscow,Russia), the state-owned Russian hydropower electicity firm, issued a press release confirming plans to develop a joint hydropower project with JSC Electric, a Kyrgyz partner firm. The Russian and Kyrgyz governments signed an agreement on this development on Thursday. RusHydro outlined that the total capacity will be 191 megawatts, with an average annual power output of 1 terawatt-hour.

The company estimated a construction cost between $410 million and $425 million. RusHydro plans to construct four hydropower stations in Kyrgyzstan jointly with local group JSC Electric, in which both parties will control a 50% stake in the venture.

"We believe that this project may be dictated by politics rather than economics," said Yaroslav Lissovolik, an analyst at Deutsche Bank in Moscow. "Previous investments of Russian power companies into Central Asia failed. There are significant risks related to tariffs and cash collection associated with these investments. This is only a tentative project that could take years to reach construction stages and implementation."

In early July, Russian President Vladimir Putin approved a program for privatization of the state-owned energy companies, but signaled a postponement of the sale of stakes in RusHydro.

He noted that the privatization of RusHydro would be feasible only after the completion of its investment program and the launching of the new stations now in progress. "There is no need to sell today for $7.5 billion something that will cost $40 billion tomorrow," Putin said on July 10, 2012.

In early June, the Russian cabinet approved a revised program for the privatization of a number of large companies by 2016, including oil companies Rosneft (Moscow, Russia) and Zarubezhneft, shipping firm Sovcomflot and national pipeline monopoly Transneft.

Under the initial privatization program approved by then-President Dmitry Medvedev last August, the state was to fully privatize Rosneft, among 14 other major companies, by 2017. But in May, shortly after his inauguration, Putin signed an order for the government to approve a plan to sell the state's stakes in oil and gas companies held via state-owned energy holding company Rosneftegaz in 2013-15.

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