Federal Grid Company to Give Up Imported Equipment by 2030

MOSCOW, August 4 (RIA Novosti) - Russian Federal Grid Company, part of the country’s largest electricity transmission and distribution grid company JSC Russian Grids (Rosseti), will reduce the share of foreign equipment in its procurements from 54 percent to 45 percent by the end of 2014 and to 3 percent by 2030, Kommersant newspaper reported Monday, citing the company’s external communications director Dmitry Klokov.

According to Klokov, the import substitution is aimed at “maintaining the sustainability of the energy sector against internal and external, economic, technogenic and natural hazards and minimizing the damage caused by various destabilizing factors.” Members of the Customs Union will provide the equipment necessary for the change.

The company assured that it deals with “major producers” when signing long-term agreements for the supply of electrical equipment.

As Kommersant noted, there are several joint ventures with foreign companies in Russia. Power Machines, together with the Japan’s Toshiba, manufacture high-voltage transformers in St. Petersburg, Germany’s Siemens – in Voronezh, and the Korean Hyundai produces gas-insulated switchgear in the far eastern Primorsky Territory.

Rosseti is now also developing its import substitution strategy and considering collaboration with State Grid Corporation of China, or SGCC. In 2013, the share of imported equipment in its total procurement reached 38 percent.

The main challenge the companies will face while reducing dependence on foreign equipment will be to substitute all the necessary components – microprocessors, condensers and other industrial electronics.

According to Rosseti, in order to successfully compete with foreign businesses, Russian companies need to consolidate their power distribution network orders and to sign long-term supply agreements. State financial support for the R&D sector is also required. To stimulate localization Rosseti proposes to reduce import duties for the import of components for the companies handling semi knock-down assembly in Russia.