Publication: Monitor Volume: 4 Issue: 80

The ownership and management of United Energy Systems, Russia’s electricity monopoly, underwent further confusion in mid-April. This confusion contributed to the decision, announced on April 15 by Aleksei Sannikov, representative of the state’s equity interest in UES, to postpone the appointment of UES’s chief executive officer, which had been slated for the company’s board meeting on April 28. Instead, this appointment is now scheduled for the next shareholders’ meeting, on May 30. (Interfax, April 15)

Sannikov’s announcement occurred the day that the Duma overrode a presidential veto of legislation requiring that the federal government’s equity position in UES not fall below 51 percent of the total, and that foreigners not be permitted to own more than 25 percent of UES equity. The Duma’s action placed foreign investors–currently the owners of 28 percent of UES’s stock–in an uncertain position. Whether their fears will be assuaged by UES board chief Viktor Kudryavy’s assurances that “no one can force nonresidents to part with their shares” remains to be seen. (Interfax, April 16)

Parliamentarian concerns about foreign influences in UES are also manifesting themselves in other ways. In response to Kudryavy’s statement that former First Deputy Prime Minister and now UES board member Anatoly Chubais “could be considered a candidate” for the CEO position, Georgi Tikhonov, a leading leftist parliamentarian, charged that Chubais was himself “a representative of a foreign firm” (presumably the CS First Boston investment bank, thought to be the largest foreign owner of UES stock). Tikhonov also claimed that Prime Minister designate Sergei Kirienko was asked about Chubais and UES four times during Kirienko’s confirmation hearings, “and on all four occasions, Kirienko refrained from answering.” Sannikov suggested that the head of one of UES’s regional affiliates would be instead named CEO. (Itar-Tass, April 14; Interfax, April 15, 17)

However these events are assessed, they seem likely to move UES away from implementing the reforms approved last year intended to divest the company of some of its power-generating assets and introduce competition into the production of electricity.