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. Last Updated: 07/27/2016

Norilsk and UES Spar Over Power

Norilsk Nickel and former power monopoly Unified Energy System traded accusations Thursday amid an escalating spat over investments in an electricity firm that Norilsk bought from UES in March.

Norilsk Nickel has been "extremely slow" to carry out the investment program of the power producer, OGK-3, UES said in a statement, threatening to take "all necessary measures" if the program is not realized in full.

Norilsk Nickel purchased control of OGK-3 for $3 billion from former power monopoly UES.

Responding to the UES statement, a source close to Norilsk said UES had sold Norilsk a company with flawed infrastructure, which had cost the metals giant an extra $100 million to fix.

On Thursday, UES held a meeting with officials from 11 of the generating companies to assess the progress of their expansion plans, which UES says are necessary to meet the country's growing demand for power.

OGK-3 was the only one whose progress on this front was found to be "unsatisfactory," UES said in a statement. The reason was "the unwillingness of the new owner of OGK-3 to fulfill its investment responsibilities, to which it is bound under a memorandum signed by [UES], as the seller, and Norilsk Nickel after its purchase of OGK-3," it said.

As the majority shareholder, however, Norilsk said it might amend the size and time frame of the program, which is worth around $1.6 billion and outlines how many new turbines are to be built, among other things. UES has said this is unacceptable.

"We only want to improve the investment program ... not throw the whole thing out," the source close to Norilsk said.