Putin Threatens New Power Players

RIA-NovostiChubais and Putin looking at a map of the country's power grid Wednesday.
Prime Minister Vladimir Putin may have changed jobs, but he doesn't appear to have lost his taste for coarse statements.

At a Wednesday meeting at the Energy Ministry, Putin warned the new private players in the power sector to stick to the rules or he would come looking for any ill-gotten gains himself.

"It's clear that a private investor wants to make profits, and the bigger and sooner the better, but I am calling on everybody to behave responsibly," Putin said, in comments distributed by his press service. "As far as irresponsible behavior is concerned, I will tell you directly, and maybe a bit rudely: I will take [the profits] from your stomach and distribute them among the poor."

His comments came within the context of the broader message he delivered in the meeting — that the government had to ensure a smooth transition as major assets in the country's power sector were transferred into private-sector hands after years of reforms.

The meeting of the newly created ministry was attended by key government officials, including Deputy Prime Ministers Igor Shuvalov and Igor Sechin and Energy Minister Sergei Shmatko, as well as Unified Energy System chief Anatoly Chubais.

Putin said it was important to make sure that people and businesses did not suffer in the transition period and to guarantee that prices remained consistent across the country.

Departing momentarily from his prepared text he said,"I am not sure that everything has been thought out here." He added: "We need to see how we will maintain a single energy space."

UES, the national power generation and transmission monopoly, will cease to exist as of July 1, with the transmission grid being run by a new state-owned entity and the Energy Ministry overseeing the sector as a whole.

Putin said one of the most important jobs for the ministry would be guaranteeing electricity for households and small and medium-sized businesses.

Other objectives for the ministry, he said, will be holding down connection costs, which presently account for as much as 15 percent of the cost of setting up businesses.

"For small businesses this is simply unmanageable," he said. Another objective will be to "significantly increase the energy efficiency of our economy," he said, adding that the government, as one of the biggest energy users, should lead the way.

Total investment needed in new distribution and generation assets could reach 20 trillion rubles ($845 billion) as demand for electricity is expected to increase by 70 percent by 2020, Putin told the meeting.

Shmatko, speaking to reporters afterward, said Putin had tasked his ministry with "keeping the social nature of the reforms intact" and building the necessary management structure to facilitate a smooth takeover from UES.

Putin delivered the message in his characteristic "brisk, tough," style, Shmatko added.

UES chief Anatoly Chubais himself declined to comment on whether he thought the Energy Ministry was fully prepared to take over the power sector, saying only that the utility had been in close contact with the ministry over the past month trying to eliminate any possible glitches.

"We are posing dozens of questions, and we are seeing a positive reaction to all these questions," he said, adding that the attitude bodes well for a smooth transition.

With less than two weeks left before it takes over, on paper the Energy Ministry still has a staff of only five — Shmatko and his four deputies — said a woman who spoke on condition of anonymity because she was still waiting for her official appointment as spokeswoman.

The meeting took place on the premises of the Industry and Trade Ministry, from which the Energy Ministry was spun off in a recent government restructuring.

Chubais said that, after eight years of spearheading the reforms in the sector, it was important to him to receive "positive feedback" from the government on the results.

"It has been given," said Chubais, who has drawn Putin's ire on occasions for criticism of Kremlin policy in the areas of foreign policy and the economy, among others. Putin told the meeting that the electricity reforms could serve as a good example for other sectors.

On a separate subject, Chubais said he had used the opportunity of the meeting to propose the easing of access for private gas producers to the country's gas pipelines. The producers regularly complain that their interests are ignored in favor of state-controlled Gazprom in gaining access to the country's state-owned pipeline system.

Chubais said Putin had agreed with the proposal, but it remained to be seen whether the issue would ultimately be addressed as a result of the meeting.