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. Last Updated: 07/27/2016

Moscow to Get First Private Power Plant

The groundbreaking for Moscow's first privately owned power station took place on Thursday, opening the way for entrepreneurs to help fill the capital's 1.5 million-kilowatt shortfall in capacity.

Turkish energy giant Zorlu Energy and U.S.-based financing company ICFS are sinking $200 million into a 130-megawatt gas-fired power plant in southern Moscow that is planned to go online in 2007.

"This is a trial balloon, the beginning of alternative generation in Moscow," Leonid Bratkin, a City Hall spokesman, said in a telephone interview.

"We have prepared 20 more locations in the city and will soon be calling tenders."

Zorlu Energy, part of Turkey's Zorlu Group conglomerate, and ICFS won a City Hall tender for the power plant earlier this year.

ICFS president Alexander Razinski said investment in the station, which will be equipped with General Electric turbines, should be recouped in seven years. The plant will employ 140 people, he said.

"Money-wise, there is more than just financial gain," Erhan Cetinok, general director of Zorlu Energy, said by telephone.

"We are looking for added value, helping shape up Russia's private energy market."

Placing generation into private hands and attracting investment into aging infrastructure is one of the key goals in the ongoing reform of Russia's electricity monopoly, Unified Energy Systems.

While the government has yet to identify the way generation assets will be transferred to private owners, only large companies like metal producers have invested in their own private generators.

"This new project in Moscow is unique," said Sergei Suverov, head of research at Gazprombank.

The new station's planned capacity is just 1 percent of what Moscow's main utility, Mosenergo, generates. But Suverov said the plant was a welcome development because of Moscow's growing demand for power.

Last month, Mosenergo's new chief, Anatoly Kopsov, said that Moscow needed 1.5 million kilowatts of additional capacity.

"[The station] is also a good example of private investment in the energy sector, whose requirements neither Mosenergo nor [its parent company] UES can meet," Suverov said.

UES CEO Anatoly Chubais has warned that the power industry's infrastructure is worn out and needs multibillion-dollar investments.

Mosenergo said last month that it was seeking to attract $500 million in loans from Gazprombank and from the European Bank for Reconstruction and Development.

Aging infrastructure was partly to blame for the May 25 power outage, which affected 4 million people in Moscow and in surrounding areas.