Publication: Monitor Volume: 4 Issue: 84

Former First Deputy Premier Anatoly Chubais has been appointed chief executive of United Energy Systems (UES), the giant monopoly that produces 77 percent of Russia’s electricity. Chubais had been angling for the job even before President Boris Yeltsin dismissed him from the government in March. Chubais said yesterday that he owes his appointment to Yeltsin. (ITAR-TASS, April 30) The company is 53 percent state-owned. Along with the gas giant Gazprom, UES is at the heart of the vicious cycle of nonpayments plaguing Russia’s economy. UES is owed huge amounts of money by manufacturing enterprises all over the country which are uncompetitive and unprofitable and cannot pay their energy bills. The power stations pass the parcel by not paying their natural gas and coal bills. The vicious cycle continues because Gazprom and UES come under pressure from regional governments to forgo revenue due to them in order to prop up “important” manufacturing plants that would otherwise go bust, with consequent losses of employment that regional governors are desperate to avoid. The energy utilities are, in effect, performing a quasi-governmental role by handing out subsidies to the regions. The result, however, is a situation in which Russian coal miners are not paid their wages for up to two years and their wives are forced to sell their blood to hospitals to earn enough cash to feed their children. Breaking this cycle will now be Chubais’ task.