Gazprom says RUSAL unilaterally broke cheap power supply deal

MOSCOW, Jan 31 (PRIME) -- Russian aluminum giant UC RUSAL has unilaterally cancelled an agreement with Gazprom Energoholding on discounted power supplies to its Nadvoitsy aluminum smelter (NAZ) in the republic of Karelia, Gazprom Energoholding's official representative Maria Frolova told PRIME on Friday.

The agreement was in force from March 2011 and was supposed to end on December 31, 2015, Frolova said, adding that the deal provided RUSAL with an annual discount of almost 250 million rubles.

"However, in autumn of 2013, RUSAL unilaterally cancelled the agreement without any explanations," she said.

Under the agreement, RUSAL was also to invest in NAZ to develop production and expand its production line, but this did not take place, she said.

RUSAL declined to comment.

Since the last year, RUSAL and Gazprom Energoholding have been trying to agree on the price of the Ondskaya hydropower plant in Karelia, which RUSAL needs to keep production at NAZ. RUSAL said it would consider shutting NAZ down if it fails to stop losses at the smelter.

(35.2448 rubles – U.S. $1)

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