Putin Dispels Power Sector Concerns

APShmatko, left, and Putin meeting with E.On chief Wulf Bernotat at the prime minister's Novo-Ogaryevo home Friday.
Prime Minister Vladimir Putin pledged Friday not to slow the development of the power industry, responding to concerns from Germany's E.On, Russian news agencies reported Friday.

"All the plans that we set out for this sector, we will fulfill. We will not cut them back," Putin said, RIA-Novosti reported.

On Friday, Putin received E.On's chief executive, Wulf Bernotat, at the presidential residence in Novo-Ogaryovo. Bernotat was reported as saying the planned liberalization of the power market was a key factor in E.On's $6 billion acquisition of power producer OGK-4 this year.

Since the acquisition, the global financial crisis has knocked Russian share price indexes down by some 70 percent, and many industries have begun to lobby against the full liberalization of electricity prices by 2011, which power firms like OGK-4 are counting on to make a profit.

"As far as we are being assured, nothing has changed," Bernotat said, Interfax reported. "It is important to us to know that all obligations will be fulfilled. … It is important for us to have political support," he was quoted as saying.

"We are conducting fruitful negotiations with [Deputy Prime Minster] Igor Sechin and [Energy Minister] Sergei Shmatko on this issue, but it is important for us to have political support," Bernotat said.

E.On, through its subsidiary E.On Ruhrgas, owns a minority stake in Gazprom and is a key importer of Russian gas into Europe. It is also working with Gazprom on the Nord Stream gas pipeline.

Reuters, MT