Russia promises to restore power to Belarus

29th June 2011, Comments 0 comments

Russia said Wednesday it will restore power to cash-strapped Belarus by the weekend after receiving a late payment for $21 million -- a paltry sum that underscored the severity of its neighbour's crisis.

"I can confirm that power will be restored in full within two days," Inter RAO UES spokesman Anton Nazarov said by telephone late Wednesday.

The Russian company cut power supplies to Belarus early Wednesday after the expiration of a second late payment deadline.

A top energy official in Minsk said Russian supplies accounted for only 12 percent of the power consumed in Belarus and could easily be compensated by shifting local power generators to natural gas operations.

But the relatively insignificant size of the sum involved goes a long way to explain the hardships confronting all firms in the ex-Soviet state.

Belarus has seen its state accounts drained by a steep jump in the price Russia charges for its energy and the extravagant expense of President Alexander Lukashenko's recent social spending spree.

Lukashenko's expenditure programme assured his December re-election. But his subsequent crackdown on the opposition left the country internationally isolated and more economically damaged that any time during his 17-year rule.

The severe hard currency shortage prompted a run on cash exchange points by people who were expecting a painful currency devaluation that eventually came in May.

But artificial exchange rates still remain in place and official currency trading is all but suspended amid outsized demand for Russian rubles and euros by companies trading abroad.

The state-owned Belenergo power supplier in Minsk said it had to turn to a commercial bank for a loan in order to pay its debts to Russia.

"In order to make the payment, Belenergo had to turn to BPS Bank," Belarus energy ministry assistant Lyudmila Zenkovich told AFP.

BPS Bank was recently acquired by Sberbank -- Russia's largest bank and one of several Moscow-based using the crisis to snap up potentially lucrative local firms.

Analysts in Minsk said this month's electricity crisis was sparked in part by Lukashenko's decision to deal with more pressing economic concerns than the Russian payments.

The country's agricultural ministry is in urgent need of pesticides and other chemicals as it enters a key harvesting season.

Belarus also needs to import some basic goods after the currency crisis sparked panic buying in major cities that saw big-ticket items such as washing machines and television sets fly off store shelves.

The analysts' suspicions are indirectly confirmed by the eerie silence that surrounded the power standoff in Minsk.

The fact that Belarus had been cut off from Russian electricity was left unreported by the local media and was not referred to directly by Lukashenko himself.

But a top official in Minsk gathered reporters on Wednesday to announce that Belarus was ready to renounce all future power imports.

"Will we continue to import in the future?" Economy Minister Nikolai Snopkov asked.

"This will depend on the price of the electricity being produced on the domestic market and the cost of the electricity we can obtain on the foreign market. We have sufficient capacity to meet all our electricity needs."

A top Russian energy official for his part warned that same thing may happen again next month if Belarus is late with its next payment.

"We only deliver what they pay for," said Nazarov of Inter RAO UES.

He said the next payment is due July 5.

© 2011 AFP

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