CEP20030102000063 Moscow Kommersant in Russian 24 Dec 02 p 2
[Report by Irina Granik: "Duma Postpones 'Electric' Package Until January"]
[FBIS Translated Text]
Yesterday the Duma postponed the second-reading examination of the package of laws on electricity industry reform until the end of January. The eventual date will be fixed by the Duma Council after the New Year holidays. The government and YeES RAO [Unified Energy Systems Russian Joint-Stock Company] are reconciled to the delay. However, they are appealing to the deputies not to prolong the process any more, because that would complicate the progress of reform.
The four centrist Duma factions nevertheless insisted that examination of the package should be postponed. The formal case for this is the same as before: that it is not clear what is going to happen to the law "On State Regulation of Tariffs". This law, which commits the government to set tariffs for electricity and gas once a year before the budget is adopted, was one of the Duma's conditions for adopting the package as a whole. It had been rejected by the upper house, but last week the Duma adopted it in an agreed wording. What happens next is up to the Federation Council and the president. In fact, as Gennadiy Raykov, leader of the People's Deputy group and one of the main instigators of the postponement, stated yesterday, the package is being postponed until January for "purely technical" reasons. Meanwhile State Duma Chair Gennadiy Seleznev has also cited another reason: the fact that not all the deputies' amendments have yet been coordinated with the government. None of these explanations is convincing. The norms in the law on the state regulation of tariffs have now been duplicated in the package of laws on the power industry, and all the deputies' amendments were coordinated with the government all of two weeks ago.
YeES RAO board member Leonid Guzman blamed what has happened on Yabloko and the Communists. He stated that the postponement of the debate on the package of laws was due to "strong political resistance". However, the resistance in the Communist and Yabloko ranks can have no effect on the passage of the laws if they have the centrists' consent. The real reasons for the postponement were spoken about yesterday by the Yabloko people themselves. Faction deputy leader Sergey Ivanenko stated bluntly that the postponement of the package was the result of a struggle within the Russian executive structures. "There are forces that are on the side of the YeES RAO leadership, and there are people within the presidential administration and the government who are trying to fight the power industry reforms. We are on the side of the latter", he announced.
The latter, as we know, include presidential adviser for economic issues Andrey Illarionov. Yesterday he voiced his attitude to the reforms once again to the Praym-TASS agency -- an attitude which, incidentally, coincides on the whole with the Yabloko faction's position. In the presidential adviser's view, the reform of the power industry should consist in its demonopolization. The essence of Andrey Illarionov's case is this: YeES RAO now has a monopoly in the industry, and the reforms proposed by the company and the government do not change that situation. In addition, according to the presidential adviser, at the present time YeES RAO is demonstrating poor management. For instance, whereas in 1998 YeES RAO's capitalization totaled $13.6 billion, today, since "the Chubays team came to YeES RAO", it is only $5.2 billion. The presidential adviser believes that this result is evidence of how "the power networks in Russia are few in number, low in quality, and lacking in capacity". Meanwhile the YeES RAO management "either bans the construction of private networks or else takes control of them for itself". And all this could lead even in the very near future to an energy crisis, since Russia "has no consolidated energy network". Whereas it is such a network that "makes it possible to move energy to where it is needed or to concentrate it in a particular region". In other words, Andrey Illarionov doubts that a reform based on the government and YeES RAO method, involving the allocation of the monopoly component of the electric power sector -- the networks -- to a single company and the shifting of all the generating companies onto the open market, will provide healthy competition in the industry. In his view, the only way to secure that is to keep vertically integrated companies in the sector following demonopolization.
The president's position on this issue, incidentally, is different. Last week he approved the deputies' intention not to rush the package of laws to the detriment of their quality; but he declared: "The main element of the reforms is distribution, while the transmission of electricity over long distances remains in state hands". In other words, the networks must be made into a state company, as the government is proposing, and not be left in the vertically integrated companies' control.
As far as the postponement of the package is concerned Aleksandr Voloshin, head of the presidential administration and simultaneously chair of the YeES RAO Board of Directors, restricts himself to diplomatic statements to the effect that the quality of the reform is no less important than the date of its implementation.
Yesterday evening, following Andrey Illarionov's accusations of monopolism against the YeES RAO management, comments began to emerge from YeES RAO itself. Company board member Andrey Trapeznikov stated: "In this situation there are two levels. There are the political interests and ambitions of certain politicians, who are determining their attitudes not so much to reform as to the YeES RAO management. The other level relates to substance. Today there is a clear understanding that, after three years of debate, both deputies and senators and regional leaders and the business elite understand the need for reform and accept the reform principles formulated by the government. Agreed solutions have been found for the overwhelming majority of the amendments".
[Description of Source: Moscow Kommersant in Russian -- Informative daily newspaper purchased by Boris Berezovskiy in 1999 and often reflecting his viewpoint.]