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6 Jun, 2008 14:48

Bell tolls for Russia’s power monopoly

The Moscow Stock Exchange has stopped trading shares of the newly privatised former Russian energy monopoly UES. Meanwhile, the head of the holding has said he will stay on in the country’s power sector after his company is liquidated on July 1.

Anatoly Chubais said he had unfinished business to resolve after failing to implement a wholesale system for large industrial customers.

The former electricity monopoly has been the most popular stock on MICEX this century, attracting up to 84% of all trade.
The 23 privatised power generators replacing UES have brought in $ US 20 billion for reinvestment in Russian infrastructure. However, they are still without the key wholesale system for big industrial clients, which has frightened investors off the sale of the last big generator OGK-1.

Speaking about the future of the sector, Mikhail Slobodin, the head of private generator IES, said: “You ain’t seen nothing yet. After UES is gone is when the real scuffles, buyouts and bidding wars start.”

Chubais revealed that he had now agreed with Russia’s Energy Ministry to stay on and implement the wholesale system, known as the capacity market.

He said: “There were not just discussions, but very important decisions were made. Among them a decision to start a new Russian capacity market from July 1.”

Now considered the world’s foremost authority on national electricity reform, experts say Chubais could have accepted lucrative posts advising foreign governments on privatisation of their energy market.  

Dmytro Konovalov, Senior Utilities Analyst at Unicredit Aton, said: “Chubais could probably go around the world and teach people how to do things. But if he wants to be part of the action – and the action is definitely here in Russia – he should stay and he will be needed.”