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. Last Updated: 07/27/2016

Mosenergo Board Appoints Yevstafyev as CEO

The board of Moscow utility Mosenergo has installed Arkady Yevstafyev as chief executive officer after parent company Unified Energy Systems won a tug-of-war with the city government over the post.

Yevstafyev, a long-time ally of UES CEO Anatoly Chubais and Mosenergo's interim manager for six months, beat out a Moscow-backed candidate, Mosenergo construction chief Sergei Romanovsky, the company said in a statement late Monday.

The administration of Mayor Yury Luzhkov, who has been a sworn political enemy of Chubais since the UES chief ran Russia's post-Soviet privatization program, fought UES last summer when it sacked Luzhkov-backed Mosenergo CEO Alexander Remezov.

Shareholders recently voted to change Mosenergo's charter to allow the board to choose the CEO. UES has a board majority.

Brunswick UBS Warburg power analyst Fyodor Tregubenko said that Yevstafyev's permanent appointment was expected and would not substantially affect UES's stock price.

Luzhkov has also wrangled with Chubais over power cuts to city institutions and has said that management juggling at Mosenergo could affect the city's heat and power supplies.

Last week, analysts said the political dispute could hurt Mosenergo financially after the city tariff agency raised power tariffs by 15 percent to 20 percent, rather than the requested 40 percent.

Tregubenko said, however, that any tariff hike was a sign the dispute was abating.

"If Luzhkov was dissatisfied, they might not have received any tariff increase. If tariffs were raised once, it means it is possible they could be raised again," he said.

"A few months ago they refused to raise heat tariffs. That was a punishment. This is a stimulant to cut costs. ... We are moving toward a market, and on such a market no one will allow them to charge inflated tariffs," Tregubenko said.

UES has been put in charge of breaking up its own heavily regulated monopoly by splitting up its power generators and grids and launching a liberalized power market.

Tregubenko said the permanent appointment of a Chubais ally meant "the restructuring plan [for Mosenergo] will be completed in the depths of UES."