Igor DZHURKO, CEO, DEEMC, JSC: We are where the growth opportunities are

Igor DZHURKO, CEO, DEEMC, JSC, speaking of his company’s priorities:

“Igor Vasilievich, your company operates in the Russian Far East, and you are at the focal point of economic growth. What projects are you mainly focusing on today?”

“The management company was established 11 years ago to address problems in the RFE utilities sector. We had to make the utilities sector manageable again after sector reform. Subsequent experience has shown that the action was very timely. DEEMC, JSC is currently developing the RFE electrical grid. By concentrating available resources in the key areas, we can meet our objectives quickly and make the most efficient use of government funding. As a result, the power lines we build can supply power to new industrial facilities on time.

“Our largest current project is in Yakutia - a high-voltage 220 kV line to connect Chernyshevsky to Lensk and on to Peledui, to provide power for the components of the Eastern Siberia - Pacific Ocean pipeline system and supply power en route to towns in Southwestern Yakutia. The cost of the project exceeds RUB 40 billion, and we expect to complete it in 2013.

“During the International Economic Forum in St. Petersburg, the regional governments of Yakutia and Irkutsk Region, along with the Russian Far East and Baikal Regional Development Foundation, as well as companies DEEMC, JSC, Federal Grid Company, and Polyus Gold signed a memorandum of cooperation to build a double-circuit 220 kV power line connecting Peledui to Chertovo Koryto-Sukhoi Log-Mamakan. This power line would connect an isolated part of Yakutia to Russia’s unified electricity system.

“Large-scale construction of power lines is under way in the Magadan Region, where we are planning to complete the 35/110 kV Tsentralnaya-Sokol-Palatka line. DEEMC, JSC is also ready to start construction of the 415-kilometer 220 kV Milkovo-Ust-Kamchatsk power line.

“Our projects open up new business development opportunities in the Russian Far East, but I would like to emphasize something else. By ensuring reliable a power supply for the regions, we improve the standard of living for residents of the RFE.”

“Your company provided electricity supply to new facilities within record time under the federal targeted program to support development in Vladivostok. Would you say the utilities sector of the Primorsky Region is ready for a new surge of economic growth?”

“Around 50 electric facilities have been upgraded or built from scratch in Vladivostok and its outlying islands. The power grid of Vladivostok has become far more reliable. New generation facilities have been built, and the region has received a steady supply of natural gas. I believe conditions have been created to support the region’s development over the next 30 years. The first new projects are getting launched: construction of a petrochemical plant in Nakhodka, an electric engineering plant - a joint project between Federal Grid Company and Hyundai.”

“The government is the main source of funding for electric utility projects in the Russian Far East for now. Are there any alternative sources?”

“We are currently receiving funding from the federal government, and DEEMC, JSC has also invested about RUB 4 billion. Our projects have very long breakeven times - decades, in fact. Only the government can afford such a long investment horizon, but the government expects the new infrastructure to help large private-sector projects to become more appealing.

“For example, the power line that would connect Peledui and Sukhoi Log in Eastern Siberia to the national grid will open up mineral deposits private businesses would never have been able to access on their own. The interest is mutual, so there is need for a private-public partnership. We need a law that would regulate the conditions and incentives for the private sector to become involved in infrastructure development projects.”

“Development of the RFE economy requires fast action, it simply cannot wait. Is DEEMC, JSC ready to expand its business and accelerate its operations?”

“We certainly are. We also have a focus on innovation. It may appear to an industry outsider that nothing has changed in power line construction over the past 50 years: you cut a corridor through the woods, you put up the pylons, you string up the wires. However, there has been a lot of innovation in the industry. New design technologies make it possible to use up to 90% of original solutions and plans without modifications to the construction process. We also design logistics for our projects in advance; after all, we are working in the extreme conditions of the north. This allows us to save money and reduce project implementation times. For example, we built the 315 km power line between Sunta and Olekminsk in Yakutia just 18 months.”

“So, the Far Eastern juggernaut has gathered momentum. Where do you go from here?”

“I am sure we will see more large projects going forward. Feasibility studies have been completed for RUB 64 billion worth of projects to be implemented over the next 2-3 years. I hope to see our operations expand into the Irkutsk Region, Buryatia, the Transbaikal. These regions need reliable grid infrastructure the most, and we go where the projects are.”