Federal Grid May Cut Investment

The state-controlled Federal Grid Company may cut its investment plans by up to 20 percent next year on expectations of lower demand for electricity, the company's technology director Mikhail Lint said Tuesday.

The company had planned investments of $9 billion for next year, according to a presentation on its web site last month.

"The figures are being negotiated with the Energy Ministry," Lint said at an electricity conference Tuesday.

Lint said the company now plans to build 2,000 kilometers of power lines next year, without giving the previous estimates.

"As growth in demand slows down, investment plans slated for the next three to four years will be drawn out to five to seven years," Lint said on the sidelines of the conference.

Lint forecast growth in electricity consumption at 1 percent to 2 percent next year, compared with previous estimates of 3 percent to 4 percent.

"Our investment plans may be corrected if the generating companies and big consumers change their own plans," said a Federal Grid Company spokeswoman, who asked not to be identified in line with company policy.

"The size of the correction is now being cleared up with the electricity market regulators and our customers," she said.

The Energy Ministry press office did not immediately confirm the figures.

Federal Grid Company deputy head Alexander Chistyakov said last month that the company itself would finance 54 percent of its investment program through 2011, Kommersant reported.

About 15 percent was to be raised through connection payments, sizable fees that consumers pay to hook up to the networks, while another 13 percent was to be earmarked from the federal budget and 18 percent financed by bank loans. "As the economic crisis affects electricity demand, there are going to be much fewer grid connection orders," said Matvei Taits, utilities analyst at UralSib. "That will result in less money for construction but will also mean that there will be less need for new transmission capacity."