China to hold talks with Russia on 2024 electricity pricing and volumes

SINGAPORE/MOSCOW (Reuters) – China will have to negotiate with Russia on the price and volumes of next year’s power supplies following Moscow’s decision to hike prices to match an increase in export fees, a senior manager said on Monday.

InterRAO, the Russian state energy group, said earlier this month it had agreed with China that Beijing would pay a higher price for its electricity in line with rising taxes.

The new export duty is linked to the rouble exchange rate that Russia introduced on a wide range of goods from Oct. 1 to help tackle its budget deficit.

Jin Wei, an executive vice president at China’s State Grid Corp, said the companies have agreed with the “price adjustment” due to Russia’s tax policy.

“We will maintain the agreed power purchase volume for the rest time of 2023,” he told Reuters on the sidelines of a conference in Singapore.

“As for the prices and volumes for China’s purchase next year, it’s yet to be decided.”

The companies will start talks in November, a spokesman for InterRAO in Moscow said. China had preliminarily agreed to the marginal tax-related price hikes both in 2023 and 2024.

InterRAO last month said it would raise prices by up to 7% for customers in some countries, including China, because of the new duty. It said it would limit, or cut off, supplies if customers refused to accept.

China bought a record 4.7 billion kilowatt-hours of electricity from Russia in 2022 and could become its second-biggest customer after Kazakhstan this year, after Russia halted power exports to Europe because of the conflict in Ukraine.

(Reporting by Muyu Xu in Singapore and Anastasia Lyrchikova in Moscow; Writing by Vladimir Soldatkin; Editing by Mike Harrison)