CRISIS IS RULED OUT

Since the beginning of April, the Russian joint-stock company Unified Energy Systems of Russia (RAO YeES) suspended power supplies to Azerbaijan. Thus, the Russian energy monopolist established a so-called "zero regime" in its relations with Azerbaijan's national energy agency - the Azarenerji joint-stock company. This means that the sides can exchange electricity only in case of emergency in the energy system of the other country. Power supplies were suspended for a banal reason: Azerbaijan and Russia failed to agree on the cost of electricity.

I need it myself!

We have to say that this is not the first time that a situation like this has occurred. In October last year, it became known that Russia is planning to change electricity tariffs for Azerbaijan and reduce the volume of export. RAO YeES notified Azarenerji at the time that in 2007 it will not be able to ensure the energy exchange with our country at the previous level "since in Russia's southern region alone, the shortage of electricity is 20 per cent". Azerbaijan was planning to buy in 2007 from 700m to one billion kW/h of electricity, but the volume of supplies should be reduced to 30m kW/h per month. If by the end of 2006 the volume of power supplies from Russia reached 300 MW at the night-time and day-time rush hours in the winter period, this year this indicator should not exceed 60 MW. In addition, RAO YeES decided "not to waste time on trifles" and increased the tariff from 3.636 cents to 4.1 US cents.

The conditions offered by Russia turned out to be unacceptable to Azerbaijan. What is more, they said that we could stop buying electricity from "our northern neighbour" altogether.

Nevertheless, during another round of negotiations between representatives of RAO YeES and Azarenerji, which ended in Baku on 29 December, the sides give up on electricity exchange. The Russian partners were also persuaded that it is necessary to keep power supplies at 200-250 MW at the evening and day-time rush hours and to agree on tariffs. Azerbaijan started buying electricity at a price that was considerably lower than the 4.1 cents announced earlier - 3.636 US cents for one kW/h. At the same time, the price of Azerbaijani electricity supplied to Russia increased from the previous 1.58 to 1.8 cents for one kW/h.

The contract with RAO YeES provided for energy exchange throughout 2007, but all the agreed tariffs covered only the first quarter and "could be prolonged at the request of the two parties". And this happened.

Incidentally, the vice-president of the national energy agency, Marlen Asgarov, assured journalists earlier that Azerbaijan was "interested not so much in the volume of power supplies from Russia as in getting the rush hour volume of 200 MW from RAO YeES. This fact does not really concern the Russians who still want to increase the price of electricity supplied to Azerbaijan because "these supplies are not profitable". And Azarenerji says that Azerbaijan has no intention of importing electricity from Russia at a price that exceeds 3.636 US cents for one kW/h. What is more, in the second quarter Azerbaijan would like to ensure an increase in the price of its own supplies. 

Whatever it is, representatives of RAO YeES will soon visit Baku to continue the negotiations on the resumption of energy exchange. It is not known how these negotiations will end. But in this regard, we would like to quote a statement by the head of the closed-type joint-stock company Inter RAO YeES, Yevgeniy Dod, who "promised" that from 1 May Russia will fully resume power supplies to Azerbaijan. "New terms of the price of power supplies to Azerbaijan will be agreed on without violating the interests of both sides," he said.

Of course, these words were not pronounced without approval "from above". But let's assume that Dod's prophecy comes true. What happens then?

We have to start by saying that during the rush hours of January-March this year, Azerbaijan received 200-250 MW of power from Russia and partly returned it at night hours. Thus, the winter shortage of energy was overcome. Now that it is spring, nothing threatens the country's energy system. However, another autumn-winter season of 2007-08 will start in half a year. This means that the national energy agency will have to think about how to make up for the energy shortage. Let's address facts.

The national energy agency says that the problem related to the shortage of the treasured kilowatt hours has almost been solved. If necessary, we can agree on a parallel energy regime with Iran as they are ready to provide us with about 600-700m kW/h of energy by the 230 kV Imisli-Parsabad power line, and the Azerbaijani side will return it in summer when there is a shortage of energy in Iran. The technical capabilities of the Imisli-Parsabad and Astara-Astara power lines make it possible to transmit 160-180 MW of electricity on average.

There is also an agreement on energy exchange with Georgia which is ready to provide us with 80 MW of electricity at the rush hours in conditions of energy exchange. For example, Azerbaijan is already supplying Georgia with electricity on day-time and is receiving it at the evening rush hours.

Operation "Module"

Another aspect of the so-called "energy independence from the northern neighbour" is to produce our own electricity. The construction of five module stations in various regions of the country - Baku, Naxcivan, Xacmaz and Saki - plays an important role in this. The implementation of an agreement between Azarenerji and the Finnish company Wartsila on the construction of these facilities, which will give the country extra 450 MW of electricity, is under way. "The first sign" - the Astara module station - produced 247m kW/h of power instead of the planned 213m kW/h in the first 10 months of its work. This "module" is capable of producing up to 700 kW/h of electricity per year, which will make it possible to fully meet the demand for energy not only in Astara District, but also in Lankaran, Lerik, Yardimli and Masalli districts of the country. 

In turn, the Xacmaz module station with a capacity of 90 MW, which was put into operation on 7 December 2006, supplies electricity not only to Xacmaz District, but also to Quba, Qusar and Davaci districts of the country. It produces 1.6-1.8m kW/h of electricity per day in average.

This year a power station of 12 energy modules with a capacity of 104 MW was installed in Baku as well. Work is under way in Saki at the moment, while in Naxcivan a complex of necessary preparatory measures is being taken. So Operation "Module" will be successfully accomplished this year.

We should point out that the total cost of the project on the construction of five such stations is estimated at 300m euros. Fuel consumption at the module power stations is about 270 grams of standard fuel. The efficiency factor of the station is about 45.5-46 per cent. It does not drop while the station is in operation.

But things are not restricted to the construction of module power stations. Another module station is being built in Sanqacal (300 MW), which, unlike the already operating ones, works on both gas and fuel oil.

Apart from that, in late 2007 and early 2008, a modern steam-gas installation with a capacity of 517 MW will be put into operation in Sumqayit. Such a facility, which costs 257m euros, has no analogues in the post-Soviet area. Also, the construction of the second unit of the Simal power station in Suvalan with a capacity of 400 MW will get under way this year.

Thus, the country is swiftly creating a necessary energy reserve for the unpredictable autumn-winter period. This will considerably lessen the threat of "blackouts" of which everyone is pretty tired. But there is another question here: How well do the power lines that are meant to deliver electricity to consumers meet all the requirements of energy security?

Everything will be fine

According to Azarenerji boss Etibar Pirverdiyev, most of the existing power lines are worn out. For example, the power line that connects the Azerbaijani thermal power station with the Abseron unit has been operating for 70 years already. In turn, the power line that starts at the Ali-Bayramli plant is 50 years old. For this reason, along with expanding the generation of electricity, the national energy agency is forced to pay greater attention to the existence of a well-established delivery system. At present, a group of specialists from Azarenerji, which is authorized to distribute electricity in regions of the country, are drawing up a complex of proposals on the reconstruction of the power infrastructure. Then a relevant plan will be submitted to President Ilham Aliyev for approval.

At the same time, the country's energy workers call on the population to save electricity. This is also furthered by the installation of metering devices. Let's take, for example, the system of the limited liability company Saki Regional Energy Supplies (RES). The head of the company, Saiq Qaribov, points out that work to install power metering devices for the customers of the Saki RES, which includes the distributing networks of Saki, Zaqatala, Balakan, Qax and Oguz districts, has been completed by 92 per cent. Work in Zaqatala and Balakan districts has been completed by 100 per cent. "Since the installation of meters, the consumption of power has considerably fallen. In the first quarter of this year, the amount of electricity used was 50m kW/h lower than in the same period of last year," Qaribov pointed out.

As for the capital city, there are no problems with the installation of meters here. But instead, the two open joint-stock companies - Bakielektriksabaka and Sumqayitelektiksabaka - have inherited quite a few unsolved problems from the Barmek-Azerbaijan company. However, the Baku power network has already drawn up its own development programme that provides for measures to meet the capital's demand for electricity, to install new power lines and restore the existing ones, as well as for work to strengthen and modernize the entire transmission infrastructure. The whole volume of work will be carried out in four directions and in two stages. The first stage will cover 2007-09 and the second - 2010-20. Among the main directions is the modernization of the infrastructure, the reconstruction of distributing networks, the establishment of a new power centre, as well as a new personnel policy.

What is more, land plots were allocated in the capital and its outskirts for the construction of 125 substations and two transformer substations, of which 45 were put into operation at the height of winter - December 2006. The construction of 80 block-type transformer stations is at its final stage. In the autumn-winter period of 2006-07, high voltage transformers in 16 110-kW and 35-kW substations were replaced with more powerful ones. Work in this direction is continuing.

It must be noted that in order to ensure the normal work of the Baku power network and fully meet the population's and economy's demand for electricity, to carry out repair and reconstruction work on power networks, 12m manats were allocated from the president's Reserve Fund to increase the authorized capital of the company.

P.S. Azerbaijan has already taken a firm stance on the import of Russian gas, and there is a reason for that: the events of the first quarter of this year showed that we can live without Gazprom. We think that the decision to stop buying Russian electricity will not affect uninterrupted energy supplies to Azerbaijani consumers. Incidentally, in 2006 the volume of electricity import from the Russian Federation totaled 700m kW/h against one billion kW/h in 2005. And this is nothing in comparison with the volumes of 2002 - 1.5bn kW/h. The import is clearly falling.