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. Last Updated: 07/27/2016

Volga Utility Aims to Be UES Model

While national power grid Unified Energy Systems is yet to clarify its controversial plan to reorganize the nation’s power utilities, the head of a pilot project in the Volga River valley says his company could become a model enterprise for the whole country.

The game plan is to share managerial experience, introduce one set of tariffs in the joint operations zone and work out a common attitude toward power sector restructuring, according to Samaraenergo president Vladimir Avetisyan, who will run the Middle-Volga Cross-Regional Management Power Co., or SMUEK.

On top of that, tariff regulation may stop being a playground for regional energy commissions, he said in an interview.

"A final decision has not been made, but if a cross-regional company is set up, setting tariffs will no longer be a prerogative of governors," Avetisyan said.

Companies similar to SMUEK could be set up in other regions, he added.

UES has yet to elaborate what exactly it has in mind for SMUEK, but the common expectation is that it will run Samaraenergo, Saratovenergo, Ulyanovskenergo and Penzaenergo, which will delegate the powers of their directors to UES’s newly created 100 percent subsidiary.

Avetisyan said SMUEK will be set up in the first quarter of next year for a period of — tentatively — two years.

"The agreement will not have a date of expiration, but I hope to get a two-year mandate," Avetisyan said.

Delegation of powers to bodies like SMUEK is allowed by article 69 of the joint-stock companies law, which allows shareholder meetings to give up the right to run corporations to an independent legal entity, which takes over the duties of the board.

UES will decide on extraordinary shareholder meetings in the Volga River valley subsidiaries this week. When the meetings vote for the plan, newly appointed directors are to approve the scheme.

SMUEK, which has not yet been registered as a legal entity, will take over UES’s subsidiaries by Feb. 2, Avetisyan said. It is not clear whether the new company will take over prize assets — federal power stations — located in the regions.

The idea to set up a management company in charge of several regional energos was first floated in early March at a meeting of fuel barons chaired by President Vladimir Putin in the western Siberian city of Surgut.

Penzaenergo’s general director, Nikolai Borisov, and his deputy, Vladimir Finikov, are former Samaraenergo officials.

Avetisyan is head of VolgaPromGaz, a holding company with annual revenues of some $30 million that includes Tolyatti-based Volgapromkhim, Middle-Volga Gas Co. and Gazbank.

Middle-Volga Gas Co. is an operator of a retail gas transportation system in the Samara region.

Gazbank has run the bank accounts for Penzaenergo, Saratovenergo and Ulyanovskenergo since UES issued an order earlier this year.

Avetisyan was appointed to run Samaraenergo last year to put the company back on the rails.

His plan to overhaul the power industry in the Volga River valley remains a black box for the stock market industry.

"I’m concerned about the possibility that minority shareholders will enjoy a lesser degree of influence in the regional energos," says Hartmut Jacob, vice president of Renaissance Capital brokerage.

Natalya Baranova, head of research with CentreInvest Securities, said the criteria for choosing energos under the SMUEK umbrella was not clear.