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28 Jan, 2008 05:22

Investors and State hit stalemate in electricity sell-offs

The company that oversees the supply of electricity to Russia's businesses and consumers has failed to sell eight out of nine electricity companies put on the market this year. Potential buyers are limited, and market watchers say investors are playing a

It is not the first time that RAO UES has failed to find a new owner for regional supply firms. 

The company’s head, Anatoly Chubais, told Russia Today that the UES will not lower the price and will find the right moment for an auction. 

“We have no goal to sell it at any price. If you don’t like the price, we will postpone the auction. We’ll find the moment for the good price – we are not selling anything cheap!” Chubais said. 

The supply companies fulfill the role of middlemen in the power sector. 

They buy electricity on the wholesale market or directly from generators and sell it to end consumers – a business model that has limited appeal. 

As a result, potential buyers can agree who will bid for what asset, ensuring that nobody else will buy it. 

Market watchers have no doubt that Russia’s electricity supply business is extremely appetizing, with retail prices to be liberalised next year. 

That means there be certainly be another round in the battle between RAO UES and the potential buyers.