B. Chubais, Chief Executive Officer of the Unified Energy System (UES) of Russia,
has been at the helm of UES for two years and started privatizing the power sector
with the divestiture of five regional energos as part of a loan agreement with
the World Bank.
restructuring of Russian power is a key element in the agreement between the government
and the World Bank as part of the SAL-3 structural adjustment loan. The terms
of the deal stipulated that UES create a number of independent electricity generators.
This should encourage the liberalization of the sector and become a springboard
for future expansion.
sees three restructuring stages. UES plans to split up the utilities into generation,
transportation, distribution and service businesses. Keeping the high-voltage
grid and control transmission lines from the regional energos via share swaps,
acquisitions and the offsetting of debt. UES will reduce its ownership in generation,
distribution, and service businesses through the sale to strategic investors.
The development of the wholesale market is the key at this stage of restructuring,
as independent generators will eventually sell electricity to end-customers on
a competitive basis. The first stage of restructuring will begin in March 2001
and finish in 2003.
owns 100% of a 42,000-km grid of high-voltage transmission lines that transmits
electricity between regions.
planned to reduce fuel deliveries to UES. UES and Gazprom signed an agreement
on gas supplies for 2000.
put electricity exports as a priority and announced several export projects. UES
has an agreement with PVO (Finland) to export 11.3 TWh of electricity to Finland
in the 2000-2004 period. And signed with Belenergo (Belorussia) and PSE (Poland)
to export electricity to Germany through Belorussia and Poland. UES has negotiated
a deal with Ukrenergo (Ukraine), Verbund (Austria), and RWE and Bayerwerk of Germany.
UES and Ukrenergo are to sell electricity to western European energos, which will
resell the electricity to Greece, Yugoslavia, Yurkey and northern Italy. Exports
are expected to start in 2002.
restructuring of the utilities should result in a highly competitive environment
where private generators will sell electricity to the wholesale market. This should
lead to better pricing for consumers and improved efficiency in utilities. The
wholesale market is to be broken up into four sectors. UES is introducing an electricity
transactions will have 100% transparency ensuring the financial stability of the
company and creating an investment-friendly environment.