Killed Pilot Called Su-27 Unsafe

With Many Foreign Parts, Sukhoi Jet Doesn't Make State Fleet

The squadron, which has about 30 aircraft and was split from the state Rossiya airline this year, needs new planes in the near future, including two Il-96-300s, two An-148s and four Tu-204/212s, according to a letter to President Dmitry Medvedev signed by Vladimir Kozhin, head of the Office for Presidential Affairs.

A copy of the letter, dated July 22 and stamped with Medvedev's approval, was obtained by Vedomosti. Viktor Khrekov, spokesman for the Office of Presidential Affairs, confirmed the letter's existence.

In an interview with Vedomosti last year, Kozhin said the fleet would be upgraded since many of the planes "don't meet modern requirements and have already reached the end of their technical life spans."

While for middle- and long-range flights there were no options beyond Ilyushins and Tupolevs, the office had a choice for regional flights: the An-148, the Tu-334 or the Superjet.

The Tu-334 started as the front-runner, although there were concerns that it could be too expensive. The plane is not in production, meaning the presidential order would need to be specially accommodated and the six planes would cost a total of 8 billion rubles ($252 million), said Konstantin Lantratov, spokesman for the United Aircraft Corporation.

After the Superjet's first flight last year, its chances rose considerably, a source close to Sukhoi told Vedomosti. But the An-148 was ultimately given the nod.

Khrekov, of the Office of Presidential Affairs, said the decision was made on security concerns. More than 70 percent of the An-148 is now produced in Russia, and the figure will increase to 90 percent. The Superjet is built as part of an international joint venture, with key elements being produced abroad.

Olga Kayukova, a spokeswoman for Sukhoi Civil Aviation, said decreasing the amount of imported Superjet parts would be very expensive, although such a pricey and prestigious order for the new plane would have been a boost for the new jet.

The regional An-148, with a catalog price of 750 million rubles, was developed in Ukraine and is produced under license at a Voronezh plant owned by the United Aircraft Corporation.

Two An-148s, built for the special squadron, will be handed over in 2010 and used to carry those accompanying top officials, such as aides and reporters, Lantratov said.
Shoigu confirms hydraulic impact causes HPP accident

http://www.itar-tass.com/eng/level2.html?NewsID=14243815&PageNum=0

SAYANO-SHUSHENSKAYA HPP, August 18 (Itar-Tass) - Russian Emergency Situations Minister Sergei Shoigu has again confirmed that a hydraulic impact caused the Monday morning accident at the Sayano-Shushenskaya hydropower plant. “The main version of the emergency is a hydraulic impact, but it is necessary to find out what caused the hydraulic impact,” he said.

RF Energy Minister Sergei Shmatko agreed with him. “It is so far early to speak about the causes,” he said.

Shoigu also said that no emergency situations took place at the aluminium smelters in Khakassia, in the Krasnoyarsk Territory, in the Kemerovo and Novosibirsk regions. “Owing to the modern equipment installed at them serious breakdowns were prevented,” Shoigu stated.

The RF emergencies minister heads efforts aimed at the elimination of the aftermath of the Sayano-Shushenskaya hydropower plant’s accident. He personally controls the progress of all operations in site. A large group of the ministry’s specialists is also working at the emergency site together with experts from the Energy Ministry, RF Federal Service of Environmental, Technological and Nuclear Supervision (Rostekhnadzor) and other services.

Sixty-four missing in Russian dam disaster likely dead-owner

MOSCOW, Aug 18 (Reuters) - The 64 people missing after the disaster at Russia's largest hydro-electric dam are most likely dead, the dam's owner said on Tuesday, presaging a far higher death toll than the 12 confirmed killed so far. "Finding anyone alive in the flood zone is unlikely, but the search continues," Vasily Zubakin, the chairman of state-run hydro-electricity company RusHydro (HYDR.MM: Quote, Profile, Research), said through a spokesman.

He said 64 people are still unaccounted for after one of the turbine rooms flooded at the Sayano-Shushenskaya dam early on Monday. (Reporting Simon Shuster; Editing by Charles Dick)
RusHydro to work Sayano-Shushenskaya repair costs into 2010 tariff request

http://www.interfax.com/3/511638/news.aspx
MOSCOW. Aug 18 (Interfax) - RusHydro (RTS: HYDR), Russia's federal

hydrogenerating company, will submit a new request to adjust tariffs for

2010 to the Federal Tariffs Service (FTS) which takes the cost of

restoring the Sayano-Shushenskaya hydroelectric plant into

consideration, Yevgeny Desyatov, the company's sales manager, told

reporters.

Desyatov said the company would be revising its request for

targeted investment resources, which are to be built into the tariff for

next year. RusHydro's previous request envisaged tariff growth of 6%

without the investment resources and 30% with them. The details of the

new request are not yet ready.

Desyatov said the genco would probably have to revise its

investment program in order to accommodate the costs of the Sayano-

Shushenskaya restoration.

VTB, Alfa Bank

One third of RusHydro's total capacity was shut down this morning due to a huge accident at the Sayano-Shushenskaya HPP. Interfax reports that units 2, 6 and 7 (30% of the HPP's capacity) were destroyed and it will take up to two years to return them to operation.

The accident claimed the lives of seven people and management representatives called it the worst in the power plant's history.

The financial consequences of the accident have yet to be clarified although we have made our own calculations: i) USD 12mn/month - purchases of electricity from the free market at higher prices to fulfill take or pay obligations (50% of production); ii) USD 15mn/month - lost profits from not selling electricity on the free market.

If the power plant remains unavailable until the end of this year it would result in some USD 100mn of losses from the (non-)sale of electricity. To this have to be added repair works and the cost of new equipment (while it is difficult to work out all the details of the damage, we estimate the cost of one hydro unit at USD 3mn), with the problem being the timing of the delivery. We also highlight possible penalties for ecological violations, the amount of which can only be speculated, that are not currently reflected in the figures.

All in all, we estimate the financial loss of the accident at USD 110mn at a maximum, which is peanuts for a USD 10bn company (some 1% of its Mcap). We note that this is in line with today's statements from management (which estimates the damage at several billion roubles).

We see today's 15% drop in GDR quotes as excessive and note that the situation might be used as a buying opportunity. As a statecontrolled company, RusHydro could get better treatment in terms of tariffs for next year as a result of the accident. In general, though, the event once again points to the poor condition of the equipment and lack of investment in the sector. This is the first serious accident since UES was broken up and, as with the Moscow blackout in 2005, it could force the authorities to re-balance the key goals in the sector's outlook.

Alfa adds:

According to various media sources, the recovery and reconstruction of the Sayano-Shushenskaya GES, which was seriously damaged after an accident yesterday leading to operations at the plant being completely halted, might take more than four years. According to the company's acting CEO, Vasily Zubakin, three turbines (out of ten) have been completely destroyed, while the state of the others is being investigated. In addition, the company estimates losses of RUB1.5bn per month in the aftermath of the accident and the associated reduction of the electricity production by the damaged power plant.

The recovery of the other turbines that were not damaged reportedly could take around 1.5 months.

The causes of the accident are being investigated, and the preliminary results of the investigation are expected to be ready this afternoon.

We view the accident at RusHydro's largest power plant (it made up a quarter of the company's annual electricity production) and its consequences as VERY NEGATIVE for the stock. Although it is still hard to quantify RusHydro's potential losses, we see three main areas where the losses will come from:

1. Repair and recovery work. The company has said that it will finance all the work on its own, but it will also rely on insurance compensation (up to $200m according to Interfax, quoting ROSNO representatives).

2. Regulated bilateral agreements. Like all generators in Russia, RusHydro (and its Sayano-Shushenskaya GES) is committed to mandatory electricity supplies under regulated tariffs. According to the terms of these contracts, the company is obliged to supply electricity regardless of its ability to produce.

And though we do not know if these contracts contain any force majeure clauses, the company will likely have to replace its own production at the damaged power plant with purchased electricity, and therefore will make considerable losses under these agreements given that regulated tariffs for hydropower plants are considerably lower than the free-market prices (especially as they could rise following the increase of coal-fired electricity production).

3. Opportunity costs. Electricity production at Sayano-Shushenskaya GES has currently come to a complete halt, and it still unclear how long this will last. The company expects a full recovery of the power plant to take over four years. The opportunity costs of the halted power unit, which makes 25% of RusHydro's entire production, could be very significant for RusHydro.

MOSCOW — Rescue workers searched Russia's largest hydroelectric plant Tuesday for an estimated 64 missing workers after an accident during repairs killed at least 12 of their colleagues.

The cause of Monday's accident at the Sayano-Shushinskaya plant in southern Siberia was unclear. Federal investigators said a transformer exploded during repair works, destroying walls and the ceiling in an engine room where turbines are located and causing the room to flood.

The plant's owner said the flooding occurred due to a pressure surge in water pipes.

Twelve workers were confirmed dead and 64 were missing, Russian Emergency Situations Minister Sergei Shoigu told the Itar-Tass news agency. Ministry spokesman Roman Dotsov said 14 people had been injured.

Some of the dead had drowned and others were crushed by debris, Dotsov told The Associated Press. The survivors were hospitalized with a range of injuries, including concussions and exposure.

Rescue workers combed through the cavernous engine room Tuesday, trying to find the missing workers.

The accident shut down the power station, which supplies several major aluminum plants. The government said electricity supplies from other power plants were being rerouted to help cover the shortfall, but outages were reported throughout the region.

The plant's dam, a towering structure that stretches about a kilometer (more than half a mile) across the Yenisei River, was not damaged and towns downstream were in no danger, Shoigu said.

The accident produced an oil spill, however, and a slick as large as 10 square miles (25 square kilometers) was floating downriver, the Natural Resources Ministry said.

Two of the plant's 10 turbines were destroyed and a third was seriously damaged, said Vasily Zubakin, acting chief executive of the plant's owner, RusHydro. He said the company was still assessing the state of the remaining seven turbines.

Shoigu said the repairs would be difficult.

"We're probably talking about years rather than months to restore three of the 10 turbines," he said on state-run television.

The world's largest aluminum producer, Rusal, was operating as usual, with its smelters being powered from other plants, company spokeswoman Yelena Shuliveistrova said.

The company was talking with the government about reducing output to free up energy supplies needed elsewhere in the region, Rusal said.

Half of the residential buildings in Abakan, the capital of the Khakassia region where the plant is located, were left without power. Residents were stocking up on basic supplies and gasoline, Mayor Nikolai Bulakin said on Ekho Moskvy radio.

Abakan, home to 160,000 people, is located 110 miles (180 kilometers) north of the plant. Power shortages also were reported in the Tomsk and Kemerovo regions.

It was not immediately clear how many people were potentially affected by the accident. The plant satisfies 10 percent of Siberia's energy needs, according to Russian media reports.

The Sayano-Shushinskaya plant was working at record capacity in June and July due to high water levels in the river, RusHydro reported last week. The plant went into operation in 1978.

Aging infrastructure has long been regarded as a key obstacle to Russia's development.

Analysts have warned that Russia needs to boost its power production significantly to meet the growing demand of industrial producers or it would face regular power shortages in the next several years. Monday's accident put these plans in jeopardy.

RusHydro's stocks were down more than 7 percent on the MICEX on Monday morning before the stock exchange suspended trading for its shares.

MOSCOW, August 18 (Itar-Tass) - The version that a terrorist act was staged at the Sayano-Shushenskaya hydropower plant has not been confirmed, the Russian Prosecutor’s Investigative Committee (SKP) said on Tuesday.

“Bomb experts of the Russian Federal Security Service (FSB) have not found traces of explosive substances at the accident site,” the SKP stressed.