Russia To Approve Electricity Reform Plan

Moscow -- - The Russian government plans to approve a long-awaited plan in May to carve up the world's largest utility by installed capacity, UES , local news agencies reported on Thursday, citing a government official.

The plan will outline a schedule for preparing the regulations and corporate procedures necessary to reform the country's electricity sector.

The government wants to spin off generation, distribution and marketing from UES to create an electricity market, while leaving the transmission grid in its own hands. "The deadline to present the government's draft plan is April 30," Interfax news agency quoted Deputy Economic Development and Trade Minister Andrei Sharonov as saying.

He said the rules by which a wholesale electricity market would operate should be approved in the second quarter of 2005.

Sharonov said that a government commission on restructuring the electricity sector had considered a reform plan drawn up by the UES management, which came under fire from minority shareholders.

"There was no harsh criticism of the plan when the commission discussed it," Sharonov said.

UES management has proposed spinning off its grid monopoly next year. The shares in the new federal grid company are to be distributed among current UES shareholders, of which the state is the largest with 53 percent.

A wholesale generating company will be cobbled together from large plants now run by UES and spun off in a similar scheme.

But minority shareholders said they wanted to see a complete ban on asset sales in the scheme, saying the management would be too absorbed in restructuring to conduct fair asset sales and that sell-offs could breed corruption or delay restructuring.

Shareholders have until May 25 to make proposals on the changes to the plan.

Sharonov said the government would prepare its own proposals and work out a document that would tie together the government's and UES's plans.