minister Nikolai Zaichenko will today ask the EBRD to help his
country find private investors for six small hydroelectric
stations and two combined heat and power plants.
increase we have had in the prices of fuels [imported from
Russia], we are very interested in doing energy saving schemes
in cooperation with the EBRD, Zaichenko told Emerging
Markets in an interview.
We are putting
the accent on private business, and these enterprises will be
privately owned whether partially or totally can be
decided in the course of negotiations.
It is understood that,
under the terms of the EBRDs country strategy
which limits the bank to working with non-state companies in
Belarus, because of the lack of political reform under
president Aleksandr Lukashenko such projects could be
undertaken as public-private partnerships (PPPs).
Any final decision
would be made by the EBRD board. While it is understood that
the US opposed amending the country strategy to specifically
allow energy-saving projects in the municipal sector, nothing
in the current wording excludes these projects.
previously we considered this a state sector, we have made a
principled decision to encourage private investment,
Zaichenko said. Let investors come, produce electrical
energy, and sell it for a profit.
Zaichenko is due to
raise the issue in a meeting with EBRD president Jean Lemierre
today in Kazan. Mike Davey, the EBRD senior banker responsible
for Belarus, told Emerging Markets: The fact that the
government is looking at private sector involvement in the
power sector is a positive step.
Zaichenko said that the
gas price increases and changed terms for oil exports, imposed
by Russia earlier this year, had not done serious harm on a
macroeconomic level. In the first four months of the year,
inflation had risen slightly, and stood at 2.8%, up
from 2.5% in the same period of 2006. More serious
was the increase in the cost of industrial goods, which was
6.5%, up from 3.1% the previous year.
But changes in
the terms of Russian oil exports have had a substantial impact
on our oil refineries, Zaichenko said. Profitability had
sunk from 26% last year to 1% this year. This follows the
decision of Russian exporters to scrap a scheme under which oil
was exported 60% on a tolling basis (with refiners paid to
process the oil before returning it to Russia for sale), and
40% sold outright to the refineries. All oil is now being sold
to the refineries at world market prices, and they have taken
out bank loans to finance the purchases.
Asked whether the
government saw privatization as part of the answer to the price
hikes, Zaichenko said: We have kept this issue under
review since 2002, and dont forget that 42.5% of the
Mozyrsky refinery [Belaruss largest] is already privately
will listen to serious proposals from those who have money to
spend and who can guarantee a supply of oil. Any final
decision would rest with the government, he said. He declined
to comment on whether Rosneft or Gazprom had expressed an
Zaichenko said the
ministrys analysts estimate that the European
Unions decision in December last year to exclude Belarus
from its system of trade preferences will cost the republic
$20-$30 million. The harm this does to us is not
critical, but it makes a difference. It will make our exports
less competitive in the European Union.
The exclusion came
after an international trade union campaign calling for
sanctions against Belarus, for its failure to meet
International Labour Organisation standards on labour
legislation and workers rights.