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. Last Updated: 07/27/2016

Chubais Says UES Will Get Tough on Debtors

Unified Energy Systems will limit consumption by federally funded organizations as part of its stand to crack down on customers who fail to pay for their supplies, the company's new chief executive, Anatoly Chubais, said Tuesday.

Chubais, who was appointed April 30, was quoted by Interfax as saying that his main task was to transform the electricity network into an efficient sector of the economy.

One of the country's top reformers and a former first deputy prime minister, Chubais is renowned for his effective management style. But he was removed from office as part of a Cabinet shake-up in March and his reputation was stained after he took a $90,000 advance for a book that has yet to be printed.

Chubais said UES would adopt tough measures against those who failed to pay for electricity, and the company's board would soon discuss imposing limits on use of electricity by organizations funded by the state.

The government holds about 52.7 percent of shares in UES, which owns the national grid and several generators as well as direct stakes in most regional utilities.

These restrictions would allow UES to improve its financial position and pay for fuel supplies from the coal and gas sectors, Chubais said.

He said the company was suffering as a result of nonpayments and there were delays of up to two months in paying salaries, while just 15 to 18 percent of electricity payments to UES were in the form of cash.

"The company has to work in a more dynamic way, and in the coming weeks steps will be taken that should help to improve the situation at UES significantly," he said, adding that no personnel changes were in the works.

The statement by Chubais, a darling of foreign investors, failed to stop a fall in UES stock prices Tuesday, the first day of trading since Friday as markets were closed Monday for the Victory Day holiday.

Shares in the electricity giant dropped 5.95 percent to $0.301 amid uncertainty about a law limiting its foreign ownership. President Boris Yeltsin last week signed a law, forced on him after the upper house of parliament overrode his veto, which caps foreign ownership in UES at 25 percent. Foreigners currently own about 30 percent of the company.

But the fall in UES stock also was part of a general drop in Russian shares, with the Moscow Times Index of 50 leading shares falling 4.06 percent to 218.52. The electronic Russian Trading System's index fell 3.99 percent to close at 290.72.

"Most likely [the drop was due to] a complete absence of buyers against the background of a bearish mood on world markets," said MFK Renaissance trader Mikhail Koltsov. "If there is any rise tomorrow it will be technical, on short covering. ... It is unlikely that we will fall this much."