Energy industry slammed for inefficiency, poor export growth

President of Belarus Alexander Lukashenko criticized the energy industry, noting that they have created a state within the state, some sort of "an independent organization which has attributes of mob and gang." The energy industry is one of the key, strategically important sectors of the economy, Alexander Lukashenko said at a meeting on the operation and development of the Belarusian energy industry. “I would say that this is a fundamental sector of the economy and is critical for other energy processes in our country. Power engineering is the blood vessels of our economy. Any disruption in its work can lead to extremely negative consequences, as it will affect all sectors of the economy and the life-support system of the country,” Alexander Lukashenko said.

The head of state drew attention to a number of problems in the industry. First, he noted the inconsistency of the energy policy, which, in turn, aggravates the contradictions between different industries and regions, exacerbates the problem of cross-subsidization. “See what happens. Industrial enterprises and housing and utilities organizations simply refuse from the services of the Energy Ministry and create their own duplicating power generating facilities. However, neither of them is willing to compromise. As a result, the energy enterprises are becoming more expensive, and try to cover their rising energy costs at the expense of the households and the budget. This is counterproductive for the state, and it will not do,” the head of state said.

According to the head of state, the imbalances in energy saving are obvious.“Why are energy-saving targets not so intense for the Energy Ministry as for other industries? Unlike other industries the Energy Ministry bears no liability for failure to comply with them,” said Alexander Lukashenko. According to the head of state, the energy industry has created their own state within the state, "an independent organization resembling a mafia or a gang."

The President also noted the poor electricity export. "The capacities are excessive. To utilize them fully we need to step up exports. But what happens in practice? The export of electricity was increased twofold last year. The export price however did not cover the country’s internal expenses. We see the same situation this year. Moreover, we are selling at lower prices today. What business does it?” Alexander Lukashenko wondered.

According to the head of state, investment projects in the energy industry give no results. “Ill-considered decisions, high design costs, conclusion of contracts with potential bankrupts and mediators, purchase of substandard and often counterfeit equipment, failure to meet the delivery dates, material losses,” the President listed. In his words, he is sometimes invited to attend an official opening ceremony of a facility which is closed up in some half-year over poor-quality equipment. “As a result we fail to meet the deadlines for commissioning of new facilities, miss the payback period projections,” Alexander Lukashenko said.

In this respect the Belarusian leader questioned the appropriateness of considerable investment in the energy industry since it gives nothing in return. According to the head of state, due to the state’s active investment policy the organizations under the Energy Ministry have been able to utilize as much as $7 billion in capital investment over the past six years. “On the one hand, it is good news. On the other, it is not so good taking into account what is going on in the sector and how funds are used there,” the President said.

“I am regularly briefed by the controlling agencies that the sector fails to meet the forecast, to provide return on the invested funds. Serious drawbacks are revealed in many areas of the industry,” Alexander Lukashenko said.

The President believes the sector lacks order in part of state procurement. “It is the area most prone to theft, corruption and slovenliness,” the head of state stressed.

Alexander Lukashenko also paid attention to personnel issues. In his words, the work of the Energy Ministry should have been analyzed in more detail while optimizing the state apparatus: “The Energy Ministry supervises the operation of two big associations – Belenergo and Beltopgaz. What is the ministry doing there?”

The head of state believes there are too many problems in the industry and demanded concrete proposals from the energy industry executives on the ways to address them.