Indian External Affairs Minister Sushma Swaraj with Russian Deputy Prime Minister Dmitry Rogozin

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Russia plans $3.3bn power play

25 June 2014 | By Joe Quirke | 0 Comments

Russia has announced that it plans to spend $3.3bn on increasing the size and efficiency of its electricity generating network.

Nikolai Podgyzov, the deputy economic development minister, said $2.5bn would be spent on developing the Elegest coalfield in the republic of Tyva on the border with Mongolia. This area, which holds an estimated 1 billion tons of coal, needs a 321km railway to link it to the Trans-Siberian.

Most of the rest would go on smart grids to make energy expenditure more efficient. The funding will come from the National Welfare Fund, which is controlled by the Ministry of Finance. 

Meanwhile, Moscow has moved to strengthen relations with India. Deputy Prime Minister Dmitry Rogozin met with Sushma Swaraj, India’s external affairs minister, last week to discuss ways of increasing bilateral trade from its current level of $10bn.

The two countries will hold further meetings later this month to discuss hydrocarbon co-operation, including the provision of pipelines to India and oil fields. Adnan Vatansever, a senior lecturer at the Russian Institute of King’s College London, told GCR that Gazprom, Russia’s state energy company, has been facing competitive difficulties in every market that it has been dealing with. This includes the Russian domestic market, where it is facing increasing competition from private sector gas suppliers, and the European market, which has shown low rates of growth.

It is therefore under pressure to find growth in other areas, and India, with its rapid rate of urbanisation, seems to offer one such opportunity. 

India has also offered Russia an alternative location for a nuclear power plant to replace the Haripur site in West Bengal, which is facing difficulties. Nuclear power is the fourth largest source of electricity in India. There are plans for the countries to meet later this year to discuss infrastructure development.

Russia has recently announced its plans to extend Trans-Siberian to South Korea and will spend $1.4bn on Turkey’s first nuclear power plant. After Modi's win a infrastructure push is expected in India.