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. Last Updated: 07/27/2016

UES Advisers Blast Government Tactics

Members of a Kremlin working group, including President Vladimir Putin's top economic adviser, have blasted the government for failing to include their proposals in a plan to reform the nation's power sector.

In a June 6 letter to Prime Minister Mikhail Kasyanov, presidential economic adviser Andrei Illarionov and others accused the government of defying Putin's orders to incorporate their recommendations, Reuters reported.

The government on May 19 tentatively approved a blueprint to overhaul national power monopoly UES despite the objections of minority shareholders, who said only a plan backed by the Kremlin group would protect the value of their assets.

Putin ordered the government to take a month to revise the plan, taking into account recommendations by the Kremlin working group. It is due to be approved in its final form on June 19.

"But despite the order of the president of the Russian Federation … recommendations by the working group have still not been taken into account," the letter said.

Aside from Illarionov, the letter was signed by the chairman of the Kremlin working group, Viktor Kress — who is governor of the Tomsk region — energy officials and a minority shareholder. They demanded the government take into account the working group's proposal to leave large chunks of the national power grid with regional utilities.

They also want the parts of the grid that will stay under state control to be transferred away from UES and directly managed by the government.

Another demand was that the state, which owns 53 percent of UES, should ensure shareholders' stakes were proportionally reflected in regional utilities that will be spun off from the company.

A source close to the negotiations said Thursday that Putin called Illarionov, UES chief Anatoly Chubais, and Economic Development and Trade Minister German Gref to the Kremlin to discuss the reform late Wednesday, and indicated the plan would be signed by Kasyanov as scheduled June 19.

Another source said that Gref was given two weeks to take into account the recommendations of the Kress commission, and if Putin's order was followed precisely, then there would be no signing on June 19.

Both sources asked that their names be withheld.

Minority shareholders have complained that under the government's plan, the process could result in asset stripping.

(Reuters, MT)