The Way to Reform Russia’s Energy System

Acting chief engineer of Novosibirskenergo Yury Pugach says that mass dismissals are just the first stage of reforming!

As was originally planned, reforming of Russia’s energy monopolist, RAO UES, was to be started with raising the tariffs. However, yesterday Duma deputies realized perfectly well that the whole packet of documents on energy reform would hardly be passed very quickly. Against this background, the leadership of RAO UES of Russia had no other choice but to establish order insider the company itself. What does it mean in fact? Acting chief engineer of Novosibirskenergo (the company is member of RAO situated in the Russian city of Novosibirsk) Yury Pugach said at a selector meeting of the leadership of RAO UES of Russia that “as a result of restructuring the repair works, about 2 thousand people were dismissed from the energy company.” However, the top managers speak differently.

Russian news agency Novosti informs, the process of reforming was started at the Novosibirsk energy company much earlier than in other energy systems of Russia. Starting already with October 1, 2002, two affiliated companies were detached from the energy company to joint-stock companies and started operating. These are Production and Repair Enterprise which includes the whole of the maintenance personnel operating at the boiler, turbine, chemical and fuel supply shops of the electric power plants; another company is Novosibirskenergospetsremont which includes the personnel of the maintenance construction and hydroengineering shops.
Novosibirskenergo and the newly set up enterprises concluded agreements for a complete service maintenance, for realization of capital, routine repairs and reconstruction works, modernization, technical re-equipment and capital construction.

By the way, Novosibirskenergo turned out several key managers currently working at RAO UES of Russia. They are for instance, first deputy chairman of RAO’s board Leonid Melamed, deputy chairman of the board Mikhail Abyzov and financial director Dmitry Zhurba; all of them run business at the end of the 1980s and at beginning of the 1990s in the city of Novosibirsk. They were members of the top management of Novosibirsk’s bank Alemar, the bank that bought Novosibirskenergo. At first, Melamed and Abyzov were rivals but later became co-owners of the energy company.

Head of the analytical department at the Center for political technologies, Alexey Makarkin says that it is not yet clear who lobbied coming of the Novosibirsk team to RAO UES of Russia. There is one version that Mikhail Abyzov was invited by RAO’s chairman Anatoly Chubais personally, and Abyzov later made for coming of other top managers from Novosibirsk to RAO. However, Alexey Makarkin is more inclined to believe that another version was highly likely: he says that coming of the Novosibirsk team to RAO was patronized by the so-called “Family.” In other words, it was financed by the oil oligarch and the paymaster of the “Family” (it is also called Yeltsin’s family), Roman Abramovich and head of the presidential administration Alexander Voloshin. Thus, the “Family” got control over financial flows of the company, which guaranteed political support on all levels of the authority to RAO’s chairman Anatoly Chubais. This is the explanation why Anatoly Chubais and Alexander Voloshin manage to get on well with each other despite of the fact that their interests differ. Coming of the Novosibirsk team to RAO UES of Russia means that the “Family” got control over a considerable part of financial flows of the company and provides the “Family” with nice starting opportunities for restructuring RAO, Alexey Makarkin says. So, no wonder why restructuring of the energy system was decided to be tested in Novosibirsk.

Acting chief engineer of Novosibirskenergo Yury Pugach motivated mass dismissals of the personnel the following way. He said at the selector meeting that restructuring results in considerable saving of finance appropriated for repairs of the equipment and increases effectiveness of financial investments. That is why, he adds, detachment of repair services must become an important stage of reforming the energy system, the stage necessary for mobilizing of finance for maintenance of the existing resources.

Yury Pugach also informed at the selector meeting that the second stage of the energy system in the city of Novosibirsk would be realized in 2003. It is also said that the repair personnel of the enterprises of the electricity supply network may be reformed and detached from the staff of the Novosibirsk energy company. Thus, only operating personnel will be working at electric power stations and at the electricity supply network enterprises. It is highly likely that the second stage of restructuring will also entail mass dismissals.

As soon as the restructuring process is tested in Novosibirsk, it will be started at other energy enterprises which are members of the RAO UES of Russia’s system.

Dmitry Slobodanuk

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Author`s name Michael Simpson