Shmatko Says Liberalization Will Go On

MTShmatko, center, on Friday attending an energy conference, where he urged forward energy sector liberalization.
The pace of the move toward market rates for electricity will not be slowed, Energy Minister Sergei Shmatko said Friday, dispelling fears that the liberalization might be delayed.

The Market Council, a state-controlled watchdog for the electricity sector, said Wednesday that the idea of slowing deregulation of power prices was being discussed.

"We have been getting a great number of requests from various sectors asking to freeze the tariff," Shmatko said on the sidelines of a meeting with power industry executives devoted to preparations for the winter heating season. "But we suggest sticking to the decisions that have already been made."

Under the liberalization plan, half of Russia's electricity production is to be traded at market rates from July 1, 2009, while prices for the other half are to be set by the Federal Tariffs Service. Only 25 percent of the electricity trade is currently deregulated.

A delay "would affect the investment climate and investors' activity in the sector," Shmatko said, calling it "a very bad signal to the market."

He also said for the first time that Russian power consumption had slowed and that there was a special team at the ministry to "react swiftly" to problems in the power sector.

"We know there will be problems between the wholesale and retail companies, between Gazprom and the generators ... problems with payment delays," Shmatko said. He added that companies shouldn't bother asking the ministry for the help, including the financial support.