Russia says to restore Belarus power supplies Friday

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.

But the size of the sum involved goes a long way to explain the difficulties now facing all state firms in ex-Soviet Belarus.

The country is facing a dire cash shortage after seeing its accounts drained by a steep jump in the price Russia charges for its energy and the extravagant expense of President Alexander Lukashenko's 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 massive 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 regular 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.

© 2011 AFP

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