Belarus to head off Russia power cut: report

27th June 2011, Comments 0 comments

Belarus intends to make a late debt payment to Russia by end of day Monday to avoid a threatened electricity cut, a government source told the Interfax news agency.

The former Soviet republic receives only about a tenth of its electricity from Russia but was hit by a politically damaging partial shutdown this month that underscored the severity of its current economic downturn.

Last week, power utility Belenergo failed to pay the second installment on a $54 million (38 million euros) debt to Russia because the National Bank of Belarus lacked sufficient Russian rubles.

The Belarus government source said Belenergo should be able to draw enough Russian currency to meet the payment after Moscow released the first tranche of a $3 billion bailout loan to its neighbor last week.

"We are pretty confident that we will find the currency and make the payment," Interfax cited the government source as saying.

A spokesman for Russia's Inter RAO UES utility said a decision to cut power to Belarus would be made on Tuesday if necessary.

The cut-off threat came amid Moscow's efforts to convince President Alexander Lukashenko to accept the terms of a privatisation programme that could see prized Belarus assets end up in the hands of Russian companies.

The sell-off is a part of the Russian loan agreement but Lukashenko has yet to put any of the country's main assets up for sale.

The $800 million received by Belarus last week will only meet the country's most immediate hard currency needs and some analysts predict another forced local currency devaluation before a second tranche arrives at the end of the year.

Belarus devalued its currency by 36 percent against the dollar last month. But the local ruble still sells at about 40 percent lower than the official rate on the black market.

The cash crunch was sparked by a jump in the price charged by Russia for its energy and a lavish state spending programme orchestrated by Lukashenko prior to his controversial re-election last year.

© 2011 AFP

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