TEN PEOPLE were killed and 62 were missing after water burst into a turbine room at Russia’s biggest hydroelectric power station yesterday, in an incident 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 incident destroyed one turbine, seriously damaged two and caused part of the plant’s structure to collapse.
The incident sowed panic in the Siberian region of Khakassia when news of the flooding broke yesterday 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 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 Moscow investment bank Renaissance Capital.
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 by almost 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.”
The government had intended to spend most of the $200 billion (€142 billion) it had stored in its two oil windfall funds during the boom years on an ambitious infrastructure scheme. But 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 $100 billion of the funds will be spent covering next year’s budget deficit alone.
A pre-crisis plan to draw 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 tariff rises have been delayed by the crisis.
A collapse in electricity demand by 5 to 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. – (Copyright The Financial Times Limited 2009)