Translated material
Phobia of darkness
Mosenergo asked the Moscow Government for $7 billion in exchange for its own shares
Moscow City Duma deputies yesterday tried to figure out how to prevent large-scale power outages. And although it was not possible to figure it out, nor to develop any measures, the deputy general director of Mosenergo, Dmitry Vasilyev, suggested that the people’s representatives find 200 billion rubles in the capital’s budget. ($7 billion) until 2010, which will save outdated power equipment. “The best way out of this situation is to issue additional shares of Mosenergo, whose capitalization is now $2 billion,” he said. And he clarified: “We cannot find that kind of money without the participation of the Moscow government.” In other words, the energy company, which has been at odds with city officials, is proposing that they take control of the energy sector into their own hands. However, it is not yet clear how RAO UES of Russia, the controlling shareholder of Mosenergo, feels about this initiative. Vasily Zubakin, a member of the energy holding's board who was present at the hearing, chose not to say anything on this topic, and the RAO press service stated that the company had not yet discussed such an option for attracting investments.The head of the Moscow Duma, Vladimir Platonov, said a week ago that as a result of the May energy crisis, Moscow would try to increase its share in Mosenergo, when the city was counting the losses caused by the power outage. Yesterday, Mr. Platonov repeated this idea: “Moscow has not yet calculated the losses associated with the energy accident on May 25, but I believe that Mosenergo can pay the city for the damage with shares of the company’s property,” RIA Novosti quotes the speaker as saying " At the same time, he said nothing regarding Mr. Vasiliev’s proposal for an additional issue of shares in the energy company, the money from which could be used for renovation.
“The accident showed that private investment is needed today,” Mr. Vasiliev said. He recalled that since 2001, Mosenergo's investments have grown from $175 million a year to 540 million. “But from my point of view, 540 million is not enough,” he said. -- RAO "UES" can issue shares worth $2 billion (apparently, what is meant is that if an additional issue of this amount is carried out annually, then by 2010 it will be possible to update the equipment, which requires $7 billion. -- Ed. ), but this must be done at the state level. As for us, we only need about six months to prepare the issue.”
Mr. Vasiliev admitted that in the work of Mosenergo “there were shortcomings at the station level and at the network level.” At the same time, he also threw stones at the capital's officials, saying that the huge damage from the May accident was largely caused by the lack of backup power sources. “Interruptions in power supply can never be ruled out, and backup generators will ensure the supply of voltage until the centralized supply is restored,” said Mr. Vasilyev. According to him, the city government should expand the network of regional substations and power grids. “If the city does not have the resources to do so,” money, it is possible to attract funds from investors engaged in construction for this work,” he said. And he stepped on the most sacred thing for Moscow: “Every year the city’s energy consumption increases several times. Each new tower that appears to replace a five-story building increases the load on existing networks by 10 times,” said Mr. Vasiliev.
It seems that this aspect will force the Moscow authorities to take even more seriously the development of alternative energy to Mosenergo. When discussing energy reform two or three years ago, many experts expressed the idea that it would be much more profitable for Russian financial-industrial and simply industrial groups to build their own energy generation. Many companies - especially metallurgical ones - have even begun construction. True, no one planned to build large facilities, but small ones were still built (for example, Surgutneftegaz built two power plants). In Moscow, alternative thermal power engineering has been developing very actively lately, and in terms of the electric power industry, the capital’s government has adopted a program for the construction of generating capacities of almost 5 thousand MW. Within its framework, for example, an agreement was concluded with Technopromexport for the construction of a thermal power plant in Moscow City. Moreover, the company considers the project quite profitable and stated that they intend to continue to participate in the implementation of the program.
If this continues, then Mosenergo will de facto stop developing and all investments will be directed exclusively to maintaining its own capacities in a more or less operational state. Which, by the way, will make the company unattractive for investors. And this is not a problem for Mosenergo alone, but for the entire system of RAO UES of Russia. “The latest energy crisis showed that the industry needs investment, which is what the reform is aimed at attracting,” German Gref, head of the Ministry of Economic Development, told reporters yesterday. Therefore, according to him, the accident should “encourage us to carry out electricity reform even faster.”
However, from the point of view of the electric power industry as a whole, it should be noted that the oppression of regional energy systems in the regions by other companies is what the developers of the reforms were striving for, namely competition. As long as companies from the RAO system withstand it, they are attractive for investment and have the potential for development, provided they receive these investments. However, if investors do not hurry, then, as Anatoly Chubais said, they risk “missing the train.” Only the head of RAO assumed that competition between investors would develop. But there is also a risk that there will be nothing to invest in.
And in this sense, Mr. Gref’s statement about the need to accelerate the reform is another reminder to the government that if nothing is done, then there may be nothing left from the energy sector.
The Federal Grid Company (FSK) , a 100 percent subsidiary of RAO UES of Russia, decided to reserve about $75 million. Its board of directors decided not to pay dividends on ordinary shares for 2004. “The entire net profit, which amounted to 2004, 2.167 billion rubles will be allocated to the company's reserve fund," the FSK press service said. The message does not say whether this decision is related to the May energy crisis in the Moscow region. FSK manages the main power lines, which until recently belonged to RAO "UES" and its regional "subsidiaries " .