Vladimir Putin meets with Energy Minister Sergei Shmatko
Transcript of the beginning of the meeting:
Vladimir Putin: Mr Shmatko, it is now March and although spring arrives slightly later in Siberia than in European Russia, it is there that the largest anti-flood measures are being carried out. As always, my first question is, how are you preparing for the flood season in Siberia and in the European part of Russia?
Secondly, we regularly experience problems with the electricity supply in some regions of the country – apart from Siberia – in particular in the south of the country, in the Krasnodar Territory. However, we have considerably improved conditions in Greater Sochi, where we have built two pipelines, one over the mountains and the other one, a completely new pipeline, at the bottom of the Black Sea. We have also built a power station there and are installing equipment at other sites – substations and the grid network. Yet there are many energy problems in the southern regions. I know that your ministry and our companies are working to improve the situation and I would like you to report on their achievements today. Please.
Sergei Shmatko: Mr Putin, this is what I’d like to say about preparations for the flood season. Spring floods are a major factor for the energy industry. Why? Because it is the grid network that is affected most of all. To efficiently prepare our facilities for the flood season, the Energy Ministry usually gives the relevant orders. We also have a group that is working alongside the Ministry of Civil Defence, Emergencies and Disaster Relief. The first precise scenario for the flood season will be prepared jointly with the Emergencies Ministry by March 20. We have organised this work properly. On March 6, Sergei Shoigu (Emergencies Minister) held a big meeting in the ministry’s National Crisis Management Centre.
To date, we have compiled a list of facilities of the IDGC (Interregional Distribution Grid Company) and FGC UES (Federal Grid Company). We have identified every facility that could be affected by flooding. In principle, the depth of the snow this year shows that the situation in the European part is likely to be similar to what it was in 2011. Meaning the flooding here will be at the annual average, whereas the flooding in Siberia will be more significant.
Vladimir Putin: The ice is very thick in Siberia…
Sergei Shmatko: Yes, it is this year, too… The snow came fairly late in the European part this year, approximately 50-70 days later than usual in some regions. You know that the cold was quite severe this year, and a lot of snow fell, in principle. This is why we are making these plans now.
The interaction between the Federal Agency for Water Resources and RusHydro is very important. RusHydro has over 300 hydropower facilities and 27 new facilities are under construction, which is why cooperation is very important. We think that there is every reason to believe that we will not have any unusual or significant problems during the flood season.
There is a problem with the low water level of the Cherkesskoye (Circassian) Reservoir. We reported on this to you when you held a meeting on the extremely cold weather in February. I told you about the problems to do with the Dagestani energy supply system. We have now resolved these problems, although it was a difficult task. We had to work in temporary emergency mode, which is a specific regime that needs constant monitoring. To sum up, we have organised the necessary efforts and do not expect any surprises.
Vladimir Putin: Good.
Sergei Shmatko: Mr Putin, regarding the electricity supply I would like to say that this year we reached record-high levels of electricity consumption, the highest in the past 20 years. The main reason for that was the unusually cold weather across Russia from late January to the end of February. However, our efforts… You know that in the past three years we have launched substantially more energy facilities than at any time since 1990 – over 6 GW last year and we plan to launch nearly 9 GW of generating facilities in 2012. Therefore, we will be able to provide this record-high volume of electricity without any major constraints.
We experienced some problems that were due to the cold weather and limited supplies of gas to our generating substations. In fact, we worked well with Gazprom, closely coordinating our efforts. As you know, our priority was to ensure supplies to the country’s generating facilities and to supply gas to the domestic market. We increased fuel oil supplies by over 83%, burning up to 50,000 tonnes a day. Yet we did it in such a way that it did not lead to any significant increases in wholesale prices.
Mr Putin, I’d like to report that our figures for January and February are roughly the same as for December. We are monitoring the situation on the wholesale and retail markets and working with our providers of last resort. I can tell you that prices this year are approximately the same as they were in December. This is not a bad indicator. We believe that our suppliers of last resort acted responsibly in this respect. Of course, we will continue to monitor the situation, because there are objective reasons for price growth, such as transport costs and coal prices, but these have not changed much. We believe that we will be able to comply with your instructions regarding the regulation of the energy market and keep price increases at or below the annual rate of inflation after July 1.
As for southern Russia, you are absolutely right. Generally speaking, Kubanenergo, which supplies electricity in the Krasnodar Territory, is a unique company. On the one hand, this is a special purpose energy system because we are implementing a very complicated project in Sochi. The facilities which we have recently launched there will provide completely different standards of energy supply to Sochi and Greater Sochi during and after the Winter Olympics. We are confident of this. We will also create a reserve for growth, for subsequent connection of new consumers to the grid.
Nevertheless, Sochi is not our only holiday destination, and the severe weather we had in Novorossiisk and Anapa this year… After thoroughly analysing the situation, we will formulate proposals for you to draft a special programme for Kubanenergo. The reason for this is that barely 100,000 people live in Anapa, but during the summer season this number shoots up to 1 million. So we are not going to deal with this kind of peak consumption by using only price balancing decisions for the region. I believe that this is a social task for the federal centre to solve – to provide quality vacations for 15 million Russians who spend their holidays in the Krasnodar Territory.
Vladimir Putin: This mostly concerns the Black sea coast, doesn’t it?
Sergei Shmatko: This is a fundamental issue. We have issued relevant instructions. IDGC Holding has put together a renovation programme. We are working in close cooperation with the mayors of Gelendzhik and Anapa and the administration of the Krasnodar Territory, and will soon be ready to submit our proposals on this issue.
Vladimir Putin: All right.