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Effective energy: Far East in search for mechanism to attract investors in the sector

November 23, 2017, 18:39 UTC+3 TASS

Earlier, the Russia’s president ordered to present suggestion on ways to stimulate private investments in modernization of energy facilities in the Far East

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© Yuri Smetyuk/TASS

TASS, November 23. /TASS/. An inflow of private investment in the Far East’s energy will make the sector more effective, will make settlements transparent and will offer legal protection. The mechanism of public-private partnership or concessions could be promising, energy and other experts and legislators told TASS.

Earlier, Russia’s President Vladimir Putin ordered the government to present by December 1 suggestion on ways to stimulate private investments in organization and/or modernization of energy facilities in the Far East.

Energy and size effectiveness

According to Yakutia’s head of the parliament’s energy committee Viktor Fedorov, the existing energy model in the republic is not effective, and the main task now is to attract investors in projects of traditional energy and of implementing new technologies.

"In my opinion, what the North should have is energy effectiveness, portability and self-sufficiency," the legislator said.

He mentioned as an example an electricity power plant in the Chokurdah compound (north of Yakutia - TASS), where till now continues working the equipment, made back in the 1960s. As a private investor, the legislator already in 2009 suggested undertaking management of Yakutsk’s boilers, but at that time nobody seemed to get interested in the offer.

Investor protection and nuclear energy

The legislator says a way out from the situation could be addendums to the federal and regional legislations, which could protect investors. "The federal law on energy effectiveness is used poorly," he said. "Probably, there should be certain regulations in investor protection."

He says, solving of the energy problem in northern Yakutia would require using various forms of nuclear energy, renewable sources of energy, including the energy of wind, the Sun. "Yakutia’s north is permanently windy. At coastal areas, wind generators should be working by the sea, they are working for decades and payback well," he said.

Prices should be transparent

The equipment at the Far East’s heat generating facilities and boilers is worn out and accounts for the growing production and distribution expenses. Private investments may improve the situation in the sector, but before inviting investors it is necessary to have transparent prices and stable settlements, Professor at the Far East Federal University Konstantin Shtym said.

"The average equipment (boilers) deterioration is more than 65%. But there are some companies, which over recent ten years have modernized equipment and grids," the expert said. "Thus, they are cutting expenses on production and distribution of the energy and continue reconstruction and modernization of technology processes."

Organizations, which keep refraining from necessary diagnostics, are most likely unable to estimate the existing problems, he said. At the same time, this is their direct obligation under the law on energy saving, as energy passports should be passes to the markets of energy products.

"Private investments, without doubts, will boost any process, and the energy supplies is not an exception. <…> Stability (of prices) and transparency (of settlements) are key conditions to attract private investors in the energy," the professor said.

At the same time, would disappear ineffective facilities - those, which offer heat energy at the price, which is higher for this or that region, the expert said.

Using other regions’ experiences

Quite promising is the mechanism of concessions, which many Russian regions have been trying, Professor at the North-Eastern Federal University Tuyara Gavrilyeva said.

"It would be working effectively in long-term tariff solutions, which the republic’s authorities (in Yakutia - TASS) should have," she said. "The problem in implementation of such agreements is in a balance of interests between investors and consumers of heat or electric energy.".

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