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Energy Sector Needs $550Bln Investment

The electricity sector will require $500 billion to $550 billion of investment over the next decade to meet future demand, according to a survey released by the KPMG consulting group on Wednesday.

"The Russian electricity system — still essentially the result of 70 years of Soviet central-planning — is in dire need of new investment, for both a renewal of assets and an overhaul of regulations and operations, if it is to realistically meet the demands of the next decade," KPMG said in a report on a survey of 65 senior executives operating the power sectors of Brazil, Russia, India and China.

"There are official plans for even bigger investment programs, but our analysis reveals that realistically Russia needs roughly 39 gigawatts of new generating capacity, plus significant modernization of the 220 gigawatts currently installed," said Andrew Korn, head of energy at KPMG in Russia and the CIS. He added that the transmission and distribution network, comprising some 3.2 million kilometers of cables stretching across 11 time zones, needs strengthening and renovation as well.

According to previous rates of electricity consumption, the power sector will require 20.6 trillion rubles ($694 billion) of investment by 2020, but the figures will be changed in 2010 because of the recession's impact on the economy, said Irina Yesipova, a spokeswoman for the Energy Ministry.


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