Russia's power utilities breakup to be completed in 2007

Moscow (Platts)--14Oct2004

Russia's power monopoly UES expects that in 2007 all Russian power utilities
will be split into separate generating, transmission and distribution
businesses, UES economic department head Igor Korzhukhovsky told a round table
on tariffs, Thursday. Currently only five of Russia's 70 AO-energoes have
completed the restructuring as part of Russia's large-scale reform in the
power sector, with the number expected to reach 30 by early 2005,
Korzhukhovsky said. As of Jun 30, the reform started in 44 power utilities,
according to UES data. UES considers cross subsidizing the major obstacle to
reform, with the amount of subsidies expected to total Rubles 68-bil
($2.3-bil) this year. The system, under which tariffs for key industrial
consumers are set at an unjustified higher level in order to guarantee low
tariffs for residents, budget-dependent organizations and agricultural
consumers, significantly hampers the reform, but current power tariffs cannot
provide for a swift solution to the problem, he said.

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