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Russia Deputy Economic Development Minister Sharonov Eyes Electricity Draft Laws


CEP20021213000070 Moscow Kommersant in Russian 11 Dec 02 P 14

[Unattributed report: "What Deputies Argued About With the Government"]

[FBIS Translated Text]
According to Andrey Sharonov, deputy minister of economic development and trade, around 1,800 amendments were submitted to the State Duma during the preparation of the six draft laws "On the Electricity Industry" for a second reading.  According to Mr. Sharonov, the disputes concerned issues of restricting the rights of the network owners.  As a result it was decided that all users could conclude contracts with the Federal Network Company to transport electricity through the national power systems.  There were also disputes regarding the preservation of state control over prices and tariffs throughout the transition period and, according to Mr. Sharonov, "a compromise was also found on this issue."

   Many disputes also arose over the state's shared involvement in cheap (in terms of the prime cost of the electricity generated) hydroelectric power stations.  The point is that the Fatherland-All Russia faction submitted an amendment to the effect that Russian Federation participation in the incorporation capital of the organization for the administration of the unified national grid and the system operator of no less than 52 percent should be guaranteed by 1 April 2005 at the latest.  It is intended that the Russian Federation should subsequently increase its share to 75 percent, notably by reducing its involvement in the generating companies.  In the process the state itself will obtain nothing from the introduction of this amendment but hydroelectric power stations run the risk of becoming unappealing to investors if the state's share of their capital increases.  Admittedly, the amendment does not extend to those hydroelectric power stations where the state's stake is currently less than 50 percent.


[Description of Source: Moscow Kommersant in Russian -- Informative daily newspaper purchased by Boris Berezovskiy in 1999 and often reflecting his viewpoint.]

Document ID: CEP20021212000189
Entry Date: 12/12/2002
Version Number: 01

Russia: 'Final Version' of Package of Electricity Reform Laws Viewed


CEP20021212000189 Moscow Kommersant in Russian 11 Dec 02

[Report by Irina Granik: "Duma Decides To Control Electricity Market" -- taken from HTML version of source provided by ISP]

[FBIS Translated Text]
Yesterday [10 December], the State Duma Energy Committee decided that its last session on preparations for the second reading of the package of laws on reform of the electric power industry would be held 11 December.   Kommersant has obtained the final version of the package.

The package of laws on reform of the electric power industry is aimed at transforming this cost-based subsidized sector into a market sector.   According to the concept underlying the laws, fair competition among power generating companies combined with state control of all power networks will enable to attract private investment to the sector and put an end to galloping tariff growth.

While submitting the laws to the Duma deputies took precautions to ensure that the population is not left without electricity and heating during the sector's reform.   Therefore, deputies decided to preserve state regulation of the electric power industry to the extent possible.   The government initially resisted on grounds that a regulated market is not a market at all.   However, it finally decided that the absence of legislative basis for the functioning of the electric power industry in the country is a greater evil.   A compromise had to be found.

During the adoption of the Law "On the Electric Power Industry" in its first reading the OVR [Fatherland-All Russia] faction put forward the following condition:   It will approve the law provided that amendments stepping up state regulation are introduced prior to its second reading.   Deputies demanded that the law should unambiguously ban phased power cutoffs during which conscientious consumers are disconnected from the power supply along with debtors and that the state share in the Federal Network Company should be increased from 52 to 75 percent and in the System Operator -- to 100 percent.   In addition, deputies demanded that all nuclear and hydroelectric facilities should remain state property and that the state retain the right to set the upper limit of tariffs for the population and enterprises.

As turned out yesterday, the demands had been taken into account.   Admittedly, the government managed to ensure that the state share in the System Operator is increased to 75 rather than 100 percent and that the law does not set the deadline for increasing the state share in the Federal Network Company and the System Operator.   After all, the state will have to purchase its share on the market, and if the deadlines are set market brokers will be able to hold back the shares in order to sell them at a higher price.

As for state regulation of tariffs, a provision was introduced envisioning that simultaneously with the draft budget the government "will set for a one-year period the maximum level of tariffs" for electricity supplied to consumers and will single out the tariffs for electricity supplied to the population.   Admittedly, it was decided that this procedure would remain in force during the transition period only, meaning, through 1 January 2005.

Deputies did not stop at those amendments, but also introduced legislative regulations for the Trade System Administrator [TSA] -- the exchange where a balance will be struck between suppliers' and consumers' price interests.   Until recently it was believed that the TSA charter will regulate all nuances of its the operation.   However, deputies decided to reinforce the TSA Coordination Council with representatives of the legislature, the Federation Council, and the government.   When the TSA was set up a year ago it was decided that the council would comprise only representatives of suppliers and consumers and a government representative playing the role of "commissioner," who would enjoy limited voting rights (only the right to veto certain decisions).   Admittedly, there is no trace of the "commissioner's" veto in the draft now.

OVR deputy Yuriy Lipatov, head of the working group, told your Kommersant correspondent:   "We preserved the original concept of the draft law and at the same time took deputies' amendments into account and filled the draft law with additional guarantees for consumers and investors."   Representatives of the government and the Unified Energy System of Russia Russian Joint Stock Company have declined to provide any comments so far.

[Description of Source: Moscow Kommersant in Russian -- Informative daily newspaper purchased by Boris Berezovskiy in 1999 and often reflecting his viewpoint.]

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