The Guardian May 30, 2001

Russia: Electricity "reforms" criminal

The leader of Russia's Communist Party attacked as "criminal" a government 
plan to overhaul the country's giant electricity monopoly UES (United 
Energy System), a key plank in overall economic reform.

The UES electricity monopoly is a vast structure with 80 regional 
subsidiaries dating back to the former Soviet Union. It is now 52.8 percent 
owned by the state and nearly 30 percent by foreign investors.

The government has not issued details of its plans, which are believed to 
include further privatisation and the introduction of competition. The 
Russian Government's decision should unlock a 100-million euro (US$88 
million) loan from the European Bank for Reconstruction and Development for 
restructuring the power sector.

The breaking up of the UES monopoly and its subsidiaries has provoked 
strong opposition. An earlier plan to overhaul the sector, proposed by 
Anatoly Chubais (UES director and the privatisation pusher) and the 
economics ministry, had been approved but shelved after it provoked violent 

Under the revised, watered-down plan just approved by government, "reform" 
of the power giant is to take place more slowly, in three stages spread 
over a period of eight to 10 years.

Liberalisation of the energy market will start in 2004 "and not before", 
Trade and Economic Development Minister German Gref said. He said that 
power prices could double at that point. He did not give any details of the 
newly-adopted plan, promising to make it public in the coming weeks.

President Putin's economic advisor attacked the revised plan, saying it 
"only reflects the interests of a small minority, that of the UES 
management, and scarcely reflects the proposals and opinions of the 

"The government took the decision which it deemed necessary and must assume 
total responsibility for its actions", the advisor said.

For his part, Chubais said the plan could have been "better, more dynamic 
and more radical". He also added that it was important that a decision had 
finally been reached and that the changes could begin to get off the 

"The government has chosen the path of destruction and is under the 
influence of people who have humiliated and ruined the country", said 
Gennady Zhuganov, leader of the Communist Party of the Russian Federation.

Zhuganov added that "reform plans would come to nothing" while Chubais was 
at the helm of UES and would only serve to worsen the critical state of 
Russia's power sector.

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