No dividend for RAO UES shareholders

The Shareholders of Russia's electricity monopoly ratify a decision not to pay out dividends this year despite high profits in 2006, opting instead to plough Unified Energy System's profits into sector reform.

The decision was passed by shareholders at the company’s penultimate Annual General Meeting on Tuesday, June 26.

They also elected the board of directors who'll shape the distribution of assets between RAO’s minority shareholders, particularly Gazprom.

2006 was a successful year for both for electricity monopoly RAO UES  and for  its head Anatoly Chubais who stamped his vision of reform on the sector.

RAO UES raised more than $US 100 MLN by selling stakes in generating companies to private investors.

The company has already invested part of this money into building new generating capacity to satisfy growing demand for electricity.

“We increased the volume of generation by 4.4 %. That is very significant growth for us.  We also launched an investment campaign and  spent $US 6 BLN on building new  generating capacity in 2006,  which is three times higher than the year before. Next year it will be $US 20 BLN,” said Anatoly Chubais, the CEO of RAO UES.

The company's reported profits reached $US 28 BLN in 2006.  But despite solid financial results RAO UES decided not to pay its shareholders a dividend.

“Because of the listing of the generating companies this lead to the situation where profit reached $US 28 BLN but is not backed by actual cash. Our offer to pay the usual dividend was not supported, so we recommended not paying any dividend at all given the current investment campaign,” added Mr Chubais.

At the annual meeting shareholders also elected the final board of directors that will complete the restructuring of the company.

The board will have to resolve a sensitive question – the rate at which shares are exchanged by RAO’s main shareholders  – Gazprom/Suek and Norilsk Nickel for stakes in generating assets.

According to election results on Tuesday afternoon the government retained 11 seats and minority shareholders will have 4 representatives  – three of whom work for Gazprom/Suek.