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. Last Updated: 07/27/2016

St. Pete to Get $11Bln Power Boost

Electricity monopoly UES and St. Petersburg Governor Valentina Matviyenko on Thursday signed off on a plan to pour $11 billion into St. Petersburg's electrical infrastructure by the end of the decade.

The 300 billion rubles required for the upgrade will come from Unified Energy Systems, federal and city budgets and private investors, who are being offered some sweeteners by city authorities, UES said in a statement.

About one-third of the money will be spent on increasing generating capacity, with the rest to be used to modernize the distribution network, UES said. The plan also includes upgrades to the city's heating network.

Like Moscow, St. Petersburg is feeling the strain of surging demand, with record levels of energy use registered last winter, according to UES figures.

A decaying last mile of the electricity distribution network and replacing capacity supplied by an aging nuclear reactor are among the problems the city will have to deal with, analysts said.

Chubais said the planned initial public offering of the region's TGK-1 generating company was one of the basic sources of funds, Interfax reported.

Matviyenko suggested that the amount coming from private investors was "very significant" and that the federal budget should contribute a larger share, the news agency said.

The city might offer investors tax breaks and cheaper land, UES said.

The high estimates of cash to be attracted from private investors is entirely dependent on radical changes in the tariff system, said Dmitry Skryabin, a utilities analyst at the Aton brokerage.