Russia's Inter RAO may supply China by building coal-fired power plant

Russia's Inter RAO might build the world's largest coal-fired power plant to sell electricity to China in a sign of strengthening bilateral economic and political ties.

Chairman Boris Kovalchuk told reporters the Russian power monopoly would examine the cost and timetable required to build the 8-gigawatt plant, which would use coal from the Erkovetskaya deposit in the Amur region in Russia's Far East.

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The announcement follows a historic $400 billion agreement to sell Russian natural gas to China for the next 30 years.

Russia, a leading producer of oil and gas, wants to diversify its energy exports away from its core European market.

Inter RAO already supplies China with electricity. A subsidiary, East Energy Co, last year increased electricity exports to China by 33 percent to 3.5 billion kilowatt hours.

Kovalchuk said that Inter RAO is looking for a loan from China to build the plant.

Analysts have estimated it would cost about $12 billion to build.

"If our Chinese partners could make enough of the cheap money they have available, this would of course improve the economics of the project," Kovalchuk said.

He said that State-owned China Huaneng Group Corp, with which Inter RAO signed a cooperation deal last week, might participate in the project.

China regularly faces power shortages during peak consumption periods as a result of surging coal prices and coal supply bottlenecks as well as transmission constraints.

"We want them to take part in it," Kovalchuk said, adding that the Chinese badly need electricity from Russia and want to build plants abroad to help reduce air pollution.