Kyrgyzstan to place 25% of Verkhne-Naryn HPP cascade under RusHydro trust management - source (Part 2)

BISHKEK. Sept 6 (Interfax) - Russian power generating company OJSC RusHydro (RTS: HYDR) will be given trust management over a 25% stake in the Verkhne-Naryn Hydro-Electric Power Plant (HPP) cascade until the project pays for itself, a Kyrgyz government source familiar with negotiating process told Interfax.

Kyrgyzstan will put half of its stake in the project under the trust management of RusHydro. As per agreements between the countries, Russia and Kyrgyzstan will each hold a 50% stake in the project.

A second, larger Russian-Kyrgyz energy project - Kambarata HPP-1 - is expected to be managed on an equal footing, the source said.

RusHydro told Interfax that it was considering a role in the project but that it was not prepared to talk about this until the technical and financial aspects had been approved. "At this stage we can only talk about approaches to planning," the company said.

OJSC Electric Power Plants will act as the Kyrgyz participant in both projects, with a 50% stake in each. Russian energy company Inter RAO UES (RTS: IRAO) will own the remaining half of the Kambarata HPP-1 construction project.

In the middle of August, the head of the foreign policy department in the Kyrgyz presidential administration, Sapar Isakov, said that Kyrgyzstan is considering putting its half of both projects under the trust management of Russia during the project payback period.

"It is better for us if the party that is investing funds recovers these funds more quickly, and we get dividends. We are thinking about this now," he said.

According to Isakov, Russia earlier said that it was interested in managing Kyrgyzstan's 25% to 50% stakes in hydropower projects until they pay for themselves.

The Russian companies will finance the construction of the two HPPs in full. The cost and dates of construction will be clarified once the feasibility study is compiled.

A Kyrgyz government source said that it would take more than half a year to develop the feasibility study for the Kambarata HPP-1. Companies will be selected on a tender basis to craft the study.

For the construction of the Verkhne-Naryn HPP cascade, it could take less than six months to craft a feasibility study due to already existing preliminary developments and the smaller size of the HPPs.

Russian First Deputy Prime Minister Igor Shuvalov and Kyrgyz First Deputy Prime Minister Aaly Karashev approved the two agreements to build and operate the Kambarata HPP-1 and Verkhne-Naryn HPP cascade on August 15. The agreements should be signed by September 15, and according to the sources, there are no reasons for the signings to be cancelled or postponed.

The Kambarata HPP-1 is part of the Crednenaryn HPP cascade, along with the Kambarata HPP-2 and Kambarata HPP-3. The plant will have capacity of 1,600 MW and is expected to produce an average of more than 5 billion kWh of electricity annually. Kyrgyzstan's largest power plant at the moment, the Toktogul HPP, has capacity of 1,200 MW and generates an annual average of 4.4 billion kWh.

The Verkhne-Naryn cascade will include four HPPs: Akbulun, Naryn-1, Naryn-2 and Naryn-3, with combined capacity of 282 MW and expected average annual output of more than 1 billion kWh.

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