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. Last Updated: 07/27/2016

Mosenergosbyt Eyes Regional Expansion

Mosenergosbyt, the country's biggest state-controlled electricity sales company, said Tuesday that it would allow industrial consumers to delay payments on their bills by up to six months as it seeks to build its client base outside Moscow.

"We will have a real fight for paying consumers next year," Mosenergosbyt chief executive Pyotr Sinyutin said at a news conference.

Industrial and private consumers have increasingly missed payments on their electricity bills in recent months as they cut staff by the hundreds and freeze up to 85 percent of production.

Andrei Kovalyov, Mosenergosbyt's head of finance, said in an interview that the company was looking to attract big industrial consumers in regions near Moscow such as Tver, Kostroma and Yaroslavl. He said the company was willing to delay payments of up to 20 million rubles — the average monthly bill for a factory — by up to six months.

Industrial consumers usually pay for electricity every week. Electricity is largely sold in the regions through small local sales companies.

As it jostles with the local companies for more clients, Mosenergosbyt recently won a contract to supply two plants of the machinery producer Transmashholding in the Tver region through an affiliate starting next year.

"We are glad to have a financially stable supplier," Valery Blazhenkov, Transmashholding's director for electricity supplies, said by telephone. "It is not like with the smaller distributors, which face bankruptcy when you miss payments twice."

Kovalyov said Mosenergosbyt was considering buying out regional electricity sales companies suffering from the financial turmoil.

At least one regional company said Tuesday that it welcomed the possibility of a bailout by a more powerful rival.

"If we had a bigger, stronger partner, it would be a very positive thing in the management of the company," Tverenergosbyt deputy chief executive Andrei Polyakov said by telephone.

He said his company faced a problem with nonpayments and still needed to refinance loans.

Rusenergosbyt, one of the country's largest private electricity sales companies, had no comment on Mosenergosbyt's regional expansion plans Tuesday. It has primarily worked in the regions but recently begun to actively expand its client base in Moscow.

"We are fighting for every paying private household too," said Kovalyov of Mosenergosbyt.

Rusenergosbyt chief executive Mikhail Andronov said at an industry conference last month that his company was interested in buying out distressed sales companies. "Many electricity sales companies have come to us with offers," Andronov said. "We are considering them."

He said the consolidation of electricity sales companies would help them survive the crisis.

But Dmitry Bulgakov, utilities analyst with Deutsche Bank, voiced skepticism that the smaller electricity sales companies would be folded into the bigger companies. "The private companies, as all private businesses, will fight for their profits and independence to the end," Bulgakov said. "So the giants shouldn't hope to get them that easily, even in times of crisis."