power systems of the Southern Federal District

Yesterday, the General Director of Volgogradenergo OJSC, Maxim Kuznetsov, announced at his press conference the beginning of the reorganization of the company. The decision to divide Volgogradenergo into four joint-stock companies, each of which will control a separate area of activity, was made on June 30 at the general meeting of Volgogradenergo shareholders. It is planned to complete all organizational procedures and establish normal operations of the companies by May 2005. Volgograd-Energo hopes that as a result of the reforms, the company will become the center of the power system of the Southern Federal District. Kommersant OJSC Volgogradenergo is a subsidiary of RAO UES of Russia (RAO UES). RAO UES owns 48.99% of Volgogradenergo shares. The second most important block of shares – 32% – belongs to LUKOIL, the rest are distributed between legal entities and individuals. The volume of sales of Volgogradenergo products in 2003 amounted to 10.6 billion rubles. Profit – 60.5 million rubles. In 2003, Volgograd-Energo generated 880.2 MW of electricity.
Decisions on reorganization have already been made in 30 subsidiaries of the RAO UES holding. On June 30, shareholders of Volgogradenergo OJSC also joined the ranks of supporters of reforming energy systems. By an overwhelming majority of votes (99.4% - “for”; 0.5% - “against” with 0.05% “abstaining.” - “Kommersant” ), it was decided to separate four open joint-stock companies from the company: “Generating Company” Volzhskaya (GC), Management Company Volga-Don Energy Complex (MC), Volgograd-Energosbyt (VES) and Volgograd Backbone Networks (VMS). Each shareholder will receive one share of the new structures for each share of Volgogradenergo he owns. Those who voted against the reorganization of the company and those who “abstained” were given the right to demand the redemption of their shares. According to the general director of OJSC Volgogradenergo Maxim Kuznetsov, “officially all four companies must be registered by January 1, 2005.” Calling this event an “important milestone,” Mr. Kuznetsov said that “the structure of all joint-stock companies has already been practically formed.” The Group of Companies will include six generating stations in Volgograd, Volzhsky and Kamyshin. The network assets of Volgogradenergo will be transferred to the Navy. In addition, Maxim Kuznetsov noted that it is this joint-stock company that will “preserve the Volgogradenergo brand.” The management company will coordinate the work of the entire energy complex during the reorganization period. According to Maxim Kuznetsov, a “light version of the management apparatus” consisting of 35 people will deal with this. The wind farm will be divided into two large blocks: divisions for working with large consumers and with guaranteeing energy suppliers. According to the general director of Volgogradenergo, such a “division of labor should bring a serious economic effect,” and in the not very distant future (after 2005 - Kommersant ) “lead to a reduction in energy tariffs.” The manager of Volgogradenergo did not limit himself to talking about plans for the current and future years. In the future, RAO UES will work on interregional integration of energy companies. The generating assets of Volgogradenergo should approximately be included in the Territorial Generating Company No. 8, which unites energy companies throughout the Southern Federal District. “It is extremely important for me to prove that our region should become the center of unification,” said Mr. Kuznetsov. “We have the largest capacity and a good strategic partner in the person of LUKOIL,” noted the general director of Volgogradenergo, “our main competitor, Rostov, has only political advantages - it is the capital of the Southern Federal District.” IGOR SVIRIZ

Kommersant (Volgograd) No. 121 from 07/07/2004

Volgogradenergo aims for the center