Deripaska seeks delay of Siberia power plant-Ifax

MOSCOW , April 1 (Reuters) - Major Russian aluminum producer UC RUSAL is pushing to delay completion of a half-built Siberian power plant after the global economic crisis forced it to postpone a nearby aluminum smelter project for two years, Interfax reported on Wednesday. RUSAL wants to put off the Boguchany hydroelectric station until after 2010, even though the delay would come at a huge cost for its partner in the venture, RusHydro , the news agency reported. RUSAL owner Oleg Deripaska, ranked as Russia's richest man by Forbes magazine a year ago, is trying to restructure billions of dollars of debt owed to western banks. His metals empire has been hit by a steep drop in foreign demand, forcing him to postpone the construction of the new smelter until market conditions improve. In a letter to RusHydro, Deripaska argued that without his company's smelter, there would be no guarantee of demand for the power station's electricity, and without demand the letter said there would be no reason to build at this time, according to Interfax. The proposed delay of at least two years would cost RusHydro 9 billion roubles ($265.5 million), the news agency reported, citing a source in the hydroelectric company. The two partners had previously said that their Siberian energy and metal project should go ahead in spite of the global economic crisis and that they were still planning to launch the hydroelectric facility as planned. A RusHydro spokeswoman said late on Wednesday that she could neither confirm nor deny the receipt of Deripaska's letter. She added that RusHydro is still pushing ahead with construction of the Boguchany plant, which is to cost 55 billion roubles -- 23 billion of which have already been invested. When completed, the facility will have a power generating capacity of 3,000 megawatts. "There will still be enough demand for its electricity without the RUSAL smelter," said spokeswoman Yelena Vishnyakova. Deripaska said in the letter, however, that the economic downturn and the postponed construction of the RUSAL smelter would cause an oversupply of power in the region. The RusHydro source told Interfax that halting construction this year would cost 7.28 billion roubles, and another 1 billion roubles would be lost for every additional year of delays. In 2007, RUSAL and RusHydro started building the $2.3 billion Boguchany smelter, which they believed would produce 1 million tonnes of the metal used in cooking foil, beverage cans, cars and construction within five to seven years. Hit by the global liquidity crunch and burdened by debt, RUSAL announced major cuts in its output and staff last month, with further cost-cutting measures detailed last week. [ID:nL5747714] [ID:nLP7750]. RusHydro announced a 17 percent cut in its staff in November [ID:nLE697846] and a cut in its 2009 capital expenditure plans this month. [ID:nLC956287] One source familiar with the project told Reuters that banks had refused to provide financing as they did not have sufficient guarantees that the electricity produced would find consumers before the launch of the smelter. The source also said that the government had cut part of its investments in the project for 2009, while investment volumes for 2010-2012 were not yet clear. Another source told Reuters that the decision on the launch of the power station would depend on the government, adding that it could be made at a special meeting on the power sector that is now scheduled for April 9 after several postponements. ($1=33.90 Rouble)