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. Last Updated: 07/27/2016

UES: Prices to Hit EU Levels in '05

MILAN, Italy -- Unified Energy Systems needs investments of $20 billion to $35 billion over the next 10 years if production is to keep pace with demand, CEO Anatoly Chubais said Tuesday.

Chubais made the remark in an interview with Italian financial daily Il Sole 24 Ore.

Asked why foreign investors might be attracted to the low-earning Russian electricity market that will be opened up to competition in 2004, Chubais said prices in Russia are expected to reach European levels within three years.

"In the first instance, I think that Russian energy tariffs should be raised step by step," the former deputy prime minister told the paper. "Two weeks ago the government announced a 20 percent increase in electricity tariffs for the first half of the year. I am convinced that prices will reach European levels within three years," he told the paper.

Currently one kilowatt sells for 2 cents in Europe and 1.2 cents in Russia. "We are asking for investments in new plants, which will take around three years to build," he said.

"Whoever invests now will, by 2004, be able to operate in a market with free prices at the same levels as those of Europe and will be able to make profits from the new Russian energy market, which is the largest in Europe.

"There is no doubt that in the next 10 years Russia will experience a sharp rise in demand for electricity. But in terms of supply, things are not very good as there has been no investment for the past 15 years," Chubais said.