World's most modern power plant to be built on the Volga

Russian power monopoly RAO UES has begun building what it claims will be the most modern and efficient power plant in the world.

The gas-powered station is being constructed near the city of Astrakhan on the Volga River.

RAO Chief Anatoly Chubais was in the region to oversee the start of the building, laying the first cement of the plant's foundations.

Chubais told Russia Today he believes Russia’s power sector is now pulling ahead of the rest of Europe.

The plant will churn out 58 units of energy from every 100 units of fuel, that’s double the capacity of the Soviet-era station next door.

The chief executive of the plant's owner, TGK-8, has released figures showing why private investors are prepared to splash out a record $US600 million for the latest Siemens technology.

“The plant will pay for itself within a decade. Our investors have calculated returns of $US450 million per year, that’s an annual net profit of 16%,” said CEO Viktor Gvozdev,

Anatoly Chubais claims Europe now lags behind Russia in energy sector reform.

“That’s the liberal logic, which by the way is quite advanced in Great Britain. But we’re far from the European transformation, because they just discuss how they will unbundle generation from the grid. In Russia that's already been done,” Cubais said.

The plant’s principal investor is Lukoil. And as Chubais revealed to RT in September, Gazprom will be forced by law to open up its pipeline to third parties. This will allow the likes of Lukoil to control the entire gas supply chain.

Lukoil has bought a controlling stake in TGK-8 from its $US1billion SPO (secondary public offering) in October. In only the second deal of its kind in Russia, the oil giant has guaranteed long-term gas supplies to the plant, crucial in a country suffering permanent shortages from Gazprom’s focus on export.

In return, Lukoil will be hoping to make market-leading windfalls when domestic gas prices are liberalised in 2011.