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. Last Updated: 07/27/2016

UES Fights to Keep Hydro Plant




Unified Energy Systems, Russia's electric monopoly, is making what appears to be a last-ditch effort to stop Krasnoyarsk Hydro, the country's biggest hydroelectric power plant, from slipping completely through its weakening grip.


Last week UES issued a recommendation that Krasnoyarsk Energo should appeal to the Federal Securities Commission, or FSC, to persuade it to initiate court proceedings against Krasnoyarsk Hydro, Yevgeny Govorov, UES' spokesman in Moscow, said Wednesday. Krasnoyarsk Energo, UES' subsidiary in Krasnoyarsk, is one of the main shareholders in the Hydro plant.


The proposed suit concerns alleged irregularities in the conduct of the Hydro plant shareholders meeting last year, which approved an 18 percent share issue depriving Krasnoyarsk Energo of a blocking vote in the Hydro plant by diluting its stake from 27.9 percent to 23.6 percent, Govorov said. Krasnoyarsk Energo had since tried to annul the issue, filing a total of 25 suits in several different courts but without any success to date.


In attempting to get the FSC, the country's stock market watchdog, to step into the legal fray, UES was trying to avert another share issue by the Hydro plant, which would further dilute Krasnoyarsk Energo's stake down to 21 percent. That issue looked likely to be approved by another Krasnoyarsk Hydro shareholders meeting scheduled for May 7, Govorov said.


"UES' hands are tied since it is not Hydro's shareholder itself and so needs to act through Krasenergo," he said. "The FSC's involvement would add weight to the suit, since it is an official body of power, not just a company."


In January, the FSC approved Krasnoyarsk Hydro's share issue. But Govorov of UES argued Wednesday that the FSC should address the legality of the decision of the shareholders' meeting that led to the issue.


FSC officials were not available for comment.


The current tug-of-war over Krasnoyarsk Hydro's share issuance is part of a larger battle between Krasnoyarsk Energo and another of the Hydro plant's major shareholders, the Krasnoyarsk Aluminum Plant, or KrAZ. At issue is the matter of energy tariffs, which play a crucial role in determining the price of aluminum.


Most observers appear to have accepted that KrAZ will maintain its growing hold over Krasnoyarsk Hydro despite UES' fierce resistance, said Dmitry Vinogradov, an energy analyst at Brunswick Warburg brokerage.


If KrAZ succeeds, it could set a precedent of assets being taken away from the energy monopoly, he said.


"This is bad for the energy sector," he said. "It shows that there is a risk for the energy system's assets being taken away by regional financial groups."


Even so, KrAZ is unlikely to be able to increase its influence over energy tariffs at present, Vinogradov said.


The tariffs are set by the local energy commission, which is overseen by governor Alexander Lebed, who has recently been involved in a bitter feud with KrAZ director Anatoly Bykov.


"If KrAZ had the same good relations with Lebed as when Lebed came to power [lower tariffs could be possible for KrAZ]," he said.