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28 May, 2008 18:27

Russian power monopoly bids farewell

Russia’s electric power monopoly Unified Energy System, RAO UES, will cease to exist in just over a month. Its head Anatoly Chubais has met the company’s shareholders to assure them the sector has a bright future.

In just a few years, UES’s CEO Anatoly Chubais managed to not only reform one of Russia’s biggest monopolies, but also attract billions of dollars into the sector.

Speaking to reporters at the company’s last shareholders' meeting on Wednesday, he seemed proud:

“Many said we would not succeed. 'You are crazy. It's impossible to attract billion-dollar investments,' they said. ' The state is your only hope,' they claimed.”

“As you see, all these doomsayers failed miserably. We got a level of investment previously unseen in any sector of the Russian economy,” Chubais said.

Analysts say the reform was necessary if Russia is to continue its vigorous economic growth.

When UES ceases to exist in July, its shareholders will receive shares of 23 companies that were part of the monopoly.

Seppo Remes, who represents minority shareholders at the company’s board, says the exchange is a good deal for the minorities:

“If you compare the market price of those future companies, it’s roughly 50% higher than the share price of UES,” he said.

Under the reform, the state will sell all of its generation assets. It will keep the distribution grid and hydro-electric generation, as well as fix the prices. Only about 15 of electricity is currently.