RusHydro faces a fine of 2.5 billion rubles (US$39 million) after admitting it was unable to finish construction of the Yakutskaya TPP-2 in Russia’s Far East on schedule.
The partially state-owned hydropower producer pledged in September to complete the gas-fired thermal power plant (TPP) by the end of 2016.
On June 23, however, RusHydro board member George Rizhinashvili warned that the milestone would not be reached until 2017.
The company struck a deal in 2012 with the Russian Energy Ministry and the Federal Property Management Agency to invest in new generating capacity in the Far East.
The scheme involved construction of the Yakutskaya TPP-2, two other TPPs in Sovetskaya Gavan and Sakhalin as well as the expansion of an existing facility in Blagoveshchenskaya.
The overall cost of the projects was estimated at almost 65 billion rubles (US$2.07 billion at the time).
Moscow injected 50.2 billion rubles (US$1.6 billion) into RusHydro, which it received from state holding company Rosneftegaz in order to fund the investment programme.
In September 2015, however, RusHydro’s newly appointed CEO, Nikolai Shulginov, wrote a letter to Russian President Vladimir Putin in which he called for a review of the projects’ schedules and cost estimates.
According to a copy of the letter obtained by Vedomosti, the executive noted that documents for the projects had been incomplete when a president decree on their implementation was signed in 2012.
Putin had agreed and the schedule for launching the power plants was extended, the newspaper reported.
The launch of the Yakutskaya TPP-2 was set for this year, while it was agreed that the facilities in Sakhalin and Sovetskaya Gavan should come on stream no later than 2017.
The cost estimate for the programme was also revised to 87 billion rubles (US$1.33 billion).
A supplementary agreement signed in October 2015 made RusHydro liable to pay a fine equal to 5% of funds allocated by the state if it fell behind this new schedule.
A RusHydro representative confirmed to Vedomosti last week that the company would have to pay this charge.
As of March 31, the firm had 61.2 billion rubles (US$934 million) on its accounts and a net debt of 196.2 billion rubles (US$2.99 billion).
Renaissance Capital analyst Vladimir Sklyar told Vedomosti that the company might have to increase its debt burden in order to fund construction of the Far Eastern plants.
He noted that RusHydro had 180 billion rubles (US$2.75 billion) in authorised but not issued bonds.