Translated material
"Metropolitan character"
Foreign investors may not be allowed to control Russian energy generating assets
Foreign investors who are planning to acquire assets in the Russian electric power industry have been clearly told that they cannot count on controlling stakes . Energy is a strategic industry, and the law being prepared on this matter will not allow foreign structures to have a stake of more than 50% of the shares. According to investment company analysts, Alexander Chikunov, member of the board of RAO UES of Russia, discussed this at the end of last week. In particular, they claim, Mr. Chikunov indicated thatthe Finnish Fortum , which has long tried to gain a foothold in the generation market of north-west Russia and has already consolidated a blocking stake in Territorial Generating Company No. 1, is unlikely to be able to obtain a controlling stake in this TGC due to "the metropolitan character of St. Petersburg." Experts believe that, in principle, the Finnish company was pointed out the real state of affairs, but this was done in a form that would further scare away foreign investors from Russia as a whole. “It has long been clear,” says one of the participants in the electricity market, “that Fortum would not gain control over TGK-1, and the Finns understood this. But why point your finger at them?The energy holding on Friday hastened to issue a special statement: “RAO UES of Russia does not have any reliable information that foreign investors may not be allowed to participate in additional issues of OGKs and TGKs, which will be carried out by open subscription in accordance with Russian legislation ", it says. And therefore, the words of Mr. Chikunov, which were quoted by analysts, as one would expect, RAO considers “incorrectly interpreted information.” However, investors obviously understood the hint and are now unlikely to seek active participation in additional issues of shares of generating companies. And this, in turn, will affect the price of these shares (which, by the way, is beneficial to Russian investors) and the revenue, which should be used for the construction and modernization of power units.
Until now, foreign investors considered investments in the Russian electric power industry to be very risky. After all, the head of RAO Anatoly Chubais, as the ideologist of the reform, the goal of which was to attract large-scale, and primarily foreign, investment, constantly faced resistance to his plan . As a result, the reform stalled, its measures went through more than one change, and only at the end of last year there was a tendency towards a gradual recovery from stagnation. However, this exit de facto turned intoMr. Chubais’s fight against the strengthening monopoly of Gazprom , which is buying up electricity assets - for example, it will soon become the controlling shareholder of Mosenergo, and using gas supplies to power plants as its main weapon in this confrontation . In addition, it recently became known that a structure controlled by Gazprom will soon become the main supplier of coal to power plants - shareholders of the Siberian Coal Energy Company (SUEK), together with the monopolist, decided to create a joint venture in which they will receive a minority stake. Anatoly Chubais called this deal “a big mistake of the state.” And the head of the Ministry of Economic Development, German Gref, said on Friday: “Gazprom’s purchase of SUEK’s coal assets is a dangerous extreme of economic policy. We must maintain a competitive environment in the country. If all of Gazprom’s assets, the value of which already exceeds $300 billion, are applied to the entire country’s economy, then we will get state monopoly capitalism of the 19th century, which will throw our country far back in its economic development.”
Apparently, the lack of gas for the second power unit of the North-West CHPP, launched in November last year, is the first step in the strategy of ousting Fortum from the regional electricity market. After all, the first power unit works exclusively for Finland, which Gazprom does not agree with - it is more profitable for the Finnish concern to buy inexpensive Russian electricity than expensive Russian gas. The realities of the North-Western region of Russia are such that the demand for electricity is already barely being satisfied, so the time is not far off when the issue of reorienting the first block of the North-West Thermal Power Plant to Russian consumers will arise. And Fortum’s participation in TGK-1, the main facilities of which are located near the Russian-Finnish border, according to experts, was intended to ensure the interests of a foreign investor in the export supplies of Russian energy.
That is why, after information about Mr. Chikunov’s statement appeared in the media, speculation appeared that Fortum could leave TGK-1 and even curtail its activities in Russia altogether. However, the concern issued a statement that it views its investments in the Russian energy sector as long-term: “We have repeatedly stated our strategic plans to participate in the capital of electric power companies,” Kari Kautinen, vice president of Fortum Corporation, is quoted in the company’s message. -- We hope to acquire shares in one or two generating companies in order to bring our knowledge and experience in the electric power industry to their activities. We are currently assessing the available information and considering various options for purchasing shares. As for TGK-1, the additional issue is planned for July 2007, and now it is too early to talk about what share Fortum will be ready to claim.”
German Gref, who was asked to comment on the situation in Krasnoyarsk, told reporters: “We generally have a positive assessment of the participation of foreign investors, and dividing investors based on nationality is unethical.”
RAO states that they are still waiting for foreign investors: “The company’s management today declares its interest in the participation of foreign investors in the upcoming additional issues of shares of OGKs and TGKs,” the energy holding company said in a statement. “The high efficiency of management of energy assets in various European countries by companies such as Fortum, ENEL, E.ON will certainly have a positive impact on the development of Russian generating companies, which will have to implement large-scale investment programs in the next three to four years.” However, it is still stipulated that there are no restrictions on the participation of foreign capital in the electric power industry just now.