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London Evening Standard: Russian energy sale hit by Putin

EXTRACT: The float of UES subsidiaries is also being overshadowed by reports that state-controlled Russian energy giant Gazprom — the company which is behind putative land grabs against oil giant Royal Dutch Shell — could bid to buy up all the shares on offer.

By: Robert Lea, Evening Standard – London: KRTBN
Published: Oct 31, 2006

The London flotation of the Russian state’s power company, Unified Energy Systems, has been dealt a blow by President Vladimir Putin.

UES executives, who were in London last week roadshowing a share sale to fund massive investment in the giant group’s ageing power stations, were criticised by Putin, who said the company does not have a clear strategy.

Quoted on his official website, Putin said: “There isn’t a clear comprehensible programme on electricity development that takes into account economic growth and an increase in production efficiency and energy consumption.”

UES is aiming to raise more than GBP40 billion from global capital markets in the coming months in a bid to prevent blackouts in Moscow and other major Russian cities.

Russia’s ailing power-generating fleet is reckoned to be so inefficient it is sucking in crucial fuel supplies that the Kremlin would rather export to Europe.

This could again lead to shortfalls in fuel being pumped across Europe — shortfalls that last winter plunged Britain and other western European economies close to a power crisis.

The float of UES subsidiaries is also being overshadowed by reports that state-controlled Russian energy giant Gazprom — the company which is behind putative land grabs against oil giant Royal Dutch Shell — could bid to buy up all the shares on offer.

European power giants such as E.On and RWE of Germany and Britain’s Centrica are reckoned to be eyeing the Russian electricity market. However, they have been told that they will not be allowed to invest directly until after the Presidential election in two years’ time.

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