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RusHydro Should Pay For Power Plant Tragedy

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More than 70 people perished in last week’s accident at the Sayano-Shushenskaya hydroelectric plant in southern Siberia. A commission has been appointed to identify the reasons for the tragedy, and damage estimates have been calculated.

As far as damages are concerned, one thing should be clear: Expenses must be paid by the plant’s owners and not consumers or taxpayers. It is tempting to try to solve the problem by raising electricity prices, but the plant must assume responsibility and pay the price for its negligence.

And what funds should be used to restore the plant? During the first two quarters of 2009, RusHydro, the operator of Sayano-Shushenskaya, earned a profit of 18 billion rubles, which is roughly equal to half of the preliminary damage estimate. For the last 23 years — 13 of which the company operated as a joint-stock company — Sayano-Shushenskaya has made a profit. Nonetheless, the plant was highly underinsured. Although it reportedly had private insurance coverage for about $200 million, this amount would cover only about 20 percent of the plant’s total damages and recovery costs. Why should the federal budget or consumers serve as the main insurance company post factum and pick up the plant’s tab?

In addition to the government’s investigation, an independent investigation of the accident should be conducted. An open public discussion and participation is crucial to make sure that the same safety lapses are not repeated and that funds are properly spent.

Twenty years ago during a football match in Sheffield, England, 96 fans were killed in a stampede that occurred at the fault of the organizers. The investigation into the tragedy not only identified the reasons and specific culprits, but it also recommended a number of measures that were needed to be taken by the owners of all football clubs to stay in business. This required additional costs that initially seemed to make the whole business look bleak. But the entire array of institutional innovations were found, and this has made English football matches the most attended and most lucrative in the world.

Russia should take a lesson from England in how to handle a major disaster. A professional response to Sayano-Shushenskaya could help define a more responsible social role for both business and government in the country’s young and evolving market economy.

Valery Zubov, a former governor of Krasnoyarsk, is a State Duma deputy from the A Just Russia party.

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