Pace of legislation slows Russian energo reform

15 July 2002 – Reform of the electricity market in Russia is being restricted by the slow pace of legislation which last week led to a decision by the Kremlin to pause restructuring in specific energos.

The State Duma will not consider the raft of legislation needed until the Autumn and officials from the Presidential Administration are claiming that some aspects of the energo restructuring contradict existing legislation.

RAO UES, which has majority or near majority holdings is most of the country’s regional utilities (or Energos), met last Friday to consider the position and said it would be turning its attention to the way in which the different lines of business of the energos might be consolidated.

RAO UES chief executive officer Anatoly Chubais had set out an ambitious to complete the programme of energo restructuring by the year-end, which is now unlikely to be achieved.

At its meeting on Friday RAO UES debated the relative advantages of forming new, separate companies to take over the consolidated assets of the energos. The state, UES shareholders and portfolio shareholders in minor energos supported this approach, while local administrations, strategic investors and portfolio investors in large energos preferred holding companies. No decision was made but UES’s restructuring committee is to develop a series of models for the consolidation of each type of business via both holding companies and the formation of new companies.

RAO UES controls 75 regional energos and 23 power plants with installed capacity of 155.1 GW. It owns 84 per cent of the high voltage transmission grid as well as the Central Dispatching Unit.

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