Power producer Mosenergo is creating an engineering firm to handle turbine construction for its own power stations and those of its peers, including Gazprom, a company official said Thursday.

The engineering, procurement and construction firm, known as an EPC contractor, will see orders worth $1 billion per year, deputy director Yury Dolin said, as Russian firms get ready to install more than 30 gigawatts of new generating capacity in the next few years.

"We intend to get commissions not only from Mosenergo itself, but also from Gazprom's electricity projects and those of the city of Moscow," Dolin said.

Mosenergo, the country's largest thermal generator, is controlled by Gazprom and serves as the power supplier to Moscow.

Dolin said the new company had been created and would be operational by the end of the year.

It has already been granted rights to construct three turbine units for Mosenergo and will get four more of these turnkey projects during the next phase of Mosenergo's development, from 2011 to 2013, Dolin said.

Major investors in the power sector have been moving toward using in-house engineers to build their turbines in an effort to cut costs through vertical integration. Experts have raised concerns, however, that the trend could compromise the reliability of Russia's power supply, as inexperienced and ill-equipped firms take on the biggest industrial expansion the country has seen in half a century.