Eleven people were killed and 65 were missing after water burst into a turbine room at Russia’s biggest hydroelectric power station on Monday, in an accident that highlights the fragile state of Russia’s Soviet-era infrastructure.
Officials said it could take “several years” and billions of roubles to repair damage at the Sayano-Shushenskaya plant after the accident destroyed one turbine, seriously damaged two and caused part of the plant’s structure to collapse.
The accident sowed panic in the Siberian region of Khakassia when news of the flooding broke on Monday morning, while steel and aluminium plants were forced to turn to emergency power. Residents, who had started to flee, began to return only after the emergencies’ ministry said there was no danger that the dam would burst.
The cause of the incident has yet to be established, but analysts said it was a powerful reminder of Russia’s dire need for hundreds of billions of roubles in investment in its crumbling Soviet-era infrastructure.
“Accidents can happen anywhere, but there is no question that for 15 years the Russian power sector was seriously underfunded,” said Derek Weaving, energy analyst at Renaissance Capital, the Moscow investment bank.
Chris Weafer, chief strategist at Uralsib investment bank in Moscow, said: “This is a stark reminder of just how urgent the investment programme for infrastructure is.”
But as the federal budget comes under strain in an economic crisis that has caused gross domestic product to collapse nearly 11 per cent, the government could be forced to turn more aggressively to international debt markets next year to fund much-needed upgrades, Mr Weafer said. “Without a doubling of the oil price, it is impossible to see where the money can come from – but it has to be found.”
Vladimir Putin’s government had intended to spend most of the $200bn (€142bn, £122bn) it had stored in its two oil windfall funds during the boom years on an ambitious infrastructure scheme. But government officials say the funds will be spent in the next “few years” on budget deficits targeting social spending and boosting the finances of state conglomerates. Some $100bn of the funds will be spent covering next year’s budget deficit alone.
A pre-crisis plan to draw in hundreds of billions of dollars in investment into the electricity sector has so far proved fruitless. Russia sold most of its electric power generation companies into private hands in a bid to boost investment and stave off power cuts, but plans to fund upgrades through increases in electricity tariffs have been delayed by the crisis.
A collapse in electricity demand by 5-10 per cent since the crisis has prevented Russia’s power infrastructure being overloaded, but “when Russia comes out of the crisis it is going to run very quickly into electricity shortages”, said Mr Weaving.
Russia is planning to raise up to $60bn on international debt markets in the next three years to help fund budget deficits.
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