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. Last Updated: 07/27/2016

UES Delinquency Swells to $3Bln

The debt that delinquent customers owe Unified Energy Systems and its subsidiaries grew $440 million in the first quarter of the year and now totals nearly $3 billion, UES said Wednesday.

The announcement came just a week after UES CEO Anatoly Chubais declared an end to the days of rampant delinquency because everyone in the country finally realized that electricity is a product "just like bread" and must be paid for.

But those days are back, and the new figures prompted Vladimir Kimerin, the head of UES' supply department, to order regional power companies during a teleconference Wednesday to "sue nonpayers and ... switch off the electricity supply wherever needed."

In October, UES said that for the first time in three years it had managed to increase its collection rate and reduce cutoffs to delinquents by 25 percent. Kimerin said that a number of restructuring agreements UES struck with its biggest debtors -- the local companies that supply communal services and major federal consumers such as the Defense and Interior ministries -- at the end of last year were supposed to make electricity bill payments "predictable," but obviously failed.

Due to unusually low temperatures this year, electricity use in the period was 5 percent higher than expected, or 192 billion rubles ($6.1 billion), he said.

After posting a collection rate of 96 percent in 2002, Kimerin said this year UES would be happy to hit 94 percent -- but that may depend on the courts.

Kimerin said that last year UES sued more than 113,000 delinquents, mainly communal service providers, for more than 42 billion rubles.

Although UES won 81,000 of those cases, "that doesn't mean it received all the money it was owed, because most of the nonpayers had no money in the bank," said UES spokesman Andrei Yegorov.

One way UES is dealing with the problem is by setting up a new company -- Russian Communal Systems -- together with Gazprom and several other major domestic companies in order to squeeze out the thousands of communal service companies that owe UES some 87 billion rubles.