UC RUSAL may close two plants, wants changes to power sales rules

MOSCOW, Jan 30 (PRIME) -- Russian aluminum giant UC RUSAL may close Sayanogorsk and Novokuznetsk aluminum smelters if the government does not approve its plans to change hydro power sales rules in Siberia, where the plants are located, Maxim Balashov, deputy CEO for electric power, told reporters during a conference call Thursday.

“As you know, Sayanogorsk and Novokuznetsk smelters are operating on the verge of profitability, and we will be forced to close them, as we have already done in the western part of the country, if hydro power sales rules not changed,” Balashov said.

Under the current legislation, large power consumers, like RUSAL, pay part of the price of small businesses and households, while the government is now preparing to eliminate this cross-subsidizing through increasing the volume of power to be sold under agreements regulated by the state.

A RUSAL representative told PRIME that the company supports the government’s draft regulation, which may change the rules for hydro power sales in Siberia. Under the draft, the government proposes to sell no more then 50% of a hydro power plant’s capacity through agreements regulated by the government between April 1, 2014 and December 31, 2015.

The remaining capacity is to be sold at a free price. From 2016, the government may cut the share of capacity to be sold through agreements to about 20%.

“If the regulation is not approved, it will not be good for the company – it has no resources to sponsor other energy consumers because the two Siberian plants – Sayanogorsky and Novokuznetsky – are on the verge of profitability,” Balashov said.

RUSAL expects its aluminum output to fall by 357,000 tonnes in 2013.

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