RUSSIA-ENERGY: A Question of Power, and Control

By IPS Correspondents Reprint | | Print |

Judith Perera and Andrei Ivanov

MOSCOW, Oct 11 1995 (IPS) - Mark it down as an example of privatisation gone awry.

In its quest to improve the efficiency of power generation systems, Russia broke up a big central monopoly into small bits. Now, it is finding out that when it comes to generating electricity, small and many may not necessarily be better than big and few.

With the 72 privatised power generation companies that emerged from the privatisation plan essentially doing their own thing, the supply of electricity was as erratic as in the past. The crisis worsened, forcing officials into action.

Russia’s First Vice-Premier Oleg Soskovets recently asked the management of the Fuel and Energy Ministry, and the Russian Unified Power Grid joint-stock company, to submit proposals for reorganising the management of the grid system.

Known by its acronym YES Rossiya, Unified Power Grid is a joint- stock company that held shares in the privatised regional power entities.

There is growing realisation that part of the problem lies in the way power companies have been privatised. In a nutshell, the problem was related to the lack of overall centralised control.

Under the proposed reorganisation plan, a unified grid would be restored. It would be under state ownership and control. The totally independent regional companies would be abolished. Prices would be decided centrally.

What exists now borders on the chaotic. For example, the Irkutsk region charges 10 times less for local electricity than Moscow. Yet the Irkutsk-Energo company, which owns a powerful hydro-electric power plant cascade on the Angara River in Siberia, has refused to join the unified grid.

Neighbouring Buryatia which has no hydro sources charges four times more that Irkutsk. Instead of supplying hard-pressed Buryatia, Irkutsk sells its surplus electricity to Mongolia at cheap rates.

YES Rossiya is concerned that the entire system may soon collapse if production levels are not maintained. According to company President, Anatoly Dyakov, this is an increasing danger.

“Many power are plants working below capacity as a result of lack of fuel which is in turn the result of mounting debts,” he says. “Failure to pay by consumers means many power companies have no funds to pay suppliers of coal, oil and gas and nuclear fuel.”

YES Rossiya owes bills to companies which have supplied it with8 coal, residual fuel oil and gas. Consumers owe the company large amounts of money as well. The grid has now switched off almost 20 percent of all generators (40,000 MW) for lack of fuel.

“Russia has considerable reserve generating capacity,” Dyakov points out. Power plants could generate 1,000b kWh of electricity while overall demand is only 810b kWh. In the event, however, plants are unable at present to generate even enough power to maintain the operating frequency of 50 Hz.

As a result, operating power plants are being subjected to excessive peak loads causing voltage frequencies to drop from 50 to 49.2 Hz. This not only threatens the long-term integrity of the system but also triggers unscheduled power cuts.

The most acute difficulties in power supplies are in the North- Western and Far Eastern regions and in Altai. Fuel and Power Minister Yuri Shafranik attributes this to failure by Defence Ministry facilities and military-industrial complex plants to pay regional power grids for supplies as well as increased tariffs on the carriage of coal and oil products.

Shafranik has suggested using credits of military-industrial and Defence Ministry plants to offset the power industry’s debts to the state which now total R1,000b.

The situation hit the headlines recently when power was cut off to a nuclear submarine base in the Arctic. This, however, was only the latest in a long series of similar incidents all of which had the potential for real catastrophe.

Just over a year ago, Russia’s ICBM Missile Forces Main Headquarters’ central command post suffered a black-out. In July all power was cut off at the Trans-Baikal military district’s headquarters and at various facilities belonging to the regional air force command and air-defense corps as well as a large number of other military facilities.

On Sep 7, one of the Northern Fleet’s mine-torpedo depots (Arkhangelsk region) was deprived of all power followed a week later by the nearby Plesetsk space centre and missile testing range and two weeks later by the Gadzhiyevo nuclear submarine base.

All this has prompted the military to take matters into their own hands posting guards at several Northern Russian power plants and forcing the Dalenerego company in the far east to resume supplies to military sites.

At the Plesetsk space centre and ICBM testing range, an assault squad of the Russian Military Space Forces took over four power sub-stations while officers from the ICBM Force seized another facilityowned by the Arkhangelsk-Energo company.

All local personnel were “asked” by the heavily armed units to work as usual and continue to provide power to Plesetsk. Power workers at one station, following orders from company management, succeeded in deactivating automatic power-transmission lines but the military put them back on stream.

“WE tried to explain to the military that we feared for our jobs,” one power worker explained. “They said we could tell our bosses whatever we liked — even that they had tied us to chairs!” At present the Plesetsk facility owes over 18,000 billion rubles to the Arkh-Energo joint-stock company.

The government has now forbidden unauthorised power shut-offs at military installations. It has also assumed special control over the supply of fuel and power resources to regions worst hit by the current shortages and has decided to put all airport fuelling stations under oil company control.

The federal budget made provision for a credit package to enable power plants to buy fuel for the coming winter, but so far none of the credit has been forthcoming and inflation is steadily eroding the value of the proposed credit.

Many plants are resorting to barter deals, receiving payment in goods for power supplied. But most regions will face serious problems in coming months.