1) Russian Website: Reforms Postponed Until After Elections 1
2) Website Views Russian Energy Reform Postponement's Political Aspects 1
From the article 2
3) Postponement of Economic Reforms Until Second Half of 2004 Seen 3
With respect to energy sector reform 4
4) Putin aide upbeat on 2003 Russian budget, criticizes energy sector reform 4
General comment 4
5) Special Interests Accused of Delaying Russian Electric Power Reforms 4
7)Russian Duma defies government to pass amended law on electricity tariffs 6
8) Russia: Duma sets maximum electricity, heat tariffs 7
9) Russian power grid chief hints at political uncertainty over reform 7
10) Threat of Postponed Examination of Power Reform Package in Russian Duma Reported 8
11) Russian power grid shares collapse ahead of Duma electricity board debate 8
12) Russian Rail Enterprises May Be Allowed Access to Federal Wholesale Market for Electricity and Generating Capacity (FOREM) 10
13) Russia: Electricity, gas tariffs to go up by 14-20 per cent in 2003 10
14) Gref Assesses Russia's Growth, Reform Prospects in Interview 10
15) Russia: Commentary Views Delays in Implementing Gref Reforms 11
16) Russia: Proposed 2003 Electricity Tariff Increases Detailed 11
18) Russian 'Oligarchic Grouping' Seen Rumored Buying Up YeES Shares Ahead of Reform 12
1) Russian Website: Reforms Postponed Until After Elections
CEP20021231000133 Moscow Grani.ru WWW-Text in Russian 30 Dec 02
[Article by Ivan Goryayev: "Results Summed Up"]
No need for abstract. Interesting claims.
“The erratic, convulsive passage of the draft laws on electricity industry reform through the Duma corridors is directly linked to the role played by the "electricity switch" at the future elections. It depends on whose company, Chubays's or that of the "family" alliance, is first in line for the privatization of generating capacities. That is the true content of the intrigues over the reorganization of the RAO YeES.”
Description of Source: Moscow Grani.ru WWW-Text in Russian -- Internet site controlled by Boris Berezovskiy
2) Website Views Russian Energy Reform Postponement's Political Aspects
CEP20021231000091 Moscow Gazeta.ru WWW-Text in Russian 23 Dec 02
[Report by Ivan Chelnok and Andrey Litvinov: "Anatoliy Chubays Stops the Country"]
-Duma postponed the examination of electricity reform draft this year, allegedly because it waits the law on regulating the natural monopolies' tariffs at the Federation Council, scheduled for 27 December. The New Date for Discussing the Energy Reform Package is 23 January 2003( this was the third delay in one month)
-Chubays claims that the delay in reform is due to “group of major and politically influential businessmen who are impeding the progress of the energy reform in order to cause the company's shares to drop and to buy them up as cheaply as possible”. Among them our friends Deripaska, Mamut and Abramovich. (influential oligarchs, members of Yeltin’s ”family”)
-share of UES went down by 3% . Market seem to think the issue is political not technical In the two days after the previous delay in examination of the draft capitalization of UES declined by $220 million.
-presidential advisor Ilarionov dislikes Chubayev’s plan, and repeatedly criticized it. Ilarionov position on energy reform is, according to the article part of a more complex political game. It seems that “the presidential staff in one way or another tried to promote the disruption of the energy reform, supporting its critic Illarionov with the aid of professional PR men.” Chubays is leader of the Union of Right-Wing Forces and a potential Russian presidential candidate at the 2008 election. Illarionov, on the other hand, is close to influential members of the notorious "family."
“After the Duma's decision not to examine the electricity industry reform this year, shares in RAO YeES [Unified Energy System of Russia Russian Joint-Stock Company] immediately plunged over 3 percent.(…) People's Deputy leader Gennadiy Raykov on this occasion explained the decision by the deputies' desire to wait for the approval of the law on regulating the natural monopolies' tariffs at the Federation Council, scheduled for 27 December. The deputies will thus not manage to examine Chubays's reforms at this session.”
”The New Date for Discussing the Energy Reform Package is 23 January 2003. But it too can be seen as hypothetical”
“RAO YeES head Anatoliy Chubays explained the difficulties in the laws' passage through the Duma by the actions of a group of major and politically influential businessmen who are impeding the progress of the energy reform in order to cause the company's shares to drop and to buy them up as cheaply as possible. Gazeta.Ru has already written that according to unofficial reports he is talking about Russkiy Alyuminiy head Oleg Deripaska, Aleksandr Mamut, chairman of the Troyka Dialog investment company board of directors, and Chukotka Governor Roman Abramovich, who has not lost his interest in Business -- that is figures traditionally linked to the old Kremlin "family."
”Indeed, in the two days after the previous decision by the Duma leadership to postpone the examination of the package of laws on energy reform, the RAO's capitalization declined by $220 million and the state's losses, taking into account its share in the company's capital, were $110 million.”
“In other words the market obviously sees the postponement of the reform to the spring session as a political and not a technical deferment.”
“It is worth noting that one of the chief critics of the present RAO YeES management, the president's economic advisor Andrey Illarionov, has long been insisting on deferring the energy reform. But the market is certainly not behaving in accordance with his instructions. Illarionov asserts that investors so dislike the plan of reforms proposed by the RAO itself which (albeit with small amendments) was the basis of the package of draft laws discussed by the Duma, that the reform's approach leads to a decline in the company's shares and deferments or setbacks on the path of reform (for instance sharp criticism of Chubays) leads on the contrary to a rise in prices.
Today's behavior of the RAO shares refutes Illarionov. And there is no reason to doubt that Andrey Illarionov is a qualified economist with a fine knowledge of the stock market's psychology. There would also seem to be no grounds for suspecting him of colluding with the buyers of the cheaper RAO shares.”
“But documents in Gazeta.Ru's possession allow us to suppose that the presidential aide's position for the past 18 months has been part of a more complex political game.”
“After becoming the president's advisor Illarionov came up against the need to create his own media image. He did not resolve that task on his own. The media plan for "A. Illarionov's image positioning" ordered from the PRopaganda PR firm in the summer of last year and now in Gazeta.Ru's possession, immediately after the government's approval of the current version of the reform blueprint will directly set the task of showing Andrey Illarionov as the most skilled "liberal economist of the new era" and Anatoliy Chubays as a very bad manager. The main thesis is that capitalization collapsed under Chubay”
“However that may be, it emerges from the words of Andrey Illarionov's press secretary that the presidential staff in one way or another tried to promote the disruption of the energy reform, supporting its critic Illarionov with the aid of professional PR men.”
“Chubays is leader of the Union of Right-Wing Forces and a potential Russian presidential candidate at the 2008 election. Illarionov, on the other hand, is close to influential members of the notorious "family."And indeed in unofficial conversations the deputies admit that they have received instructions from the Kremlin to "waste Chubays".”
“Essentially the reform of the RAO YeES is not much more radical than the reform of the Ministry of Railways, which proceeded virtually without a hitch”
Description of Source: Moscow Gazeta.ru WWW-Text in Russian -- Website reportedly financed by Yukos oil company and often critical of the government.
3) Postponement of Economic Reforms Until Second Half of 2004 Seen
CEP20021227000121 Moscow Nezavisimaya Gazeta in Russian 26 Dec 02 PP1, 3
[Article by Natalya Melikova: "A Commercial Break is Declared in the Economy -- Structural Reforms in 2003 Will Be Replaced by Campaign PR" -- taken from HTML version of source provided by ISP provider]
“NG's sources in the Kremlin and the government confirm that structural reforms in the economy will be postponed -- at least until the completion of parliamentary and presidential elections”.
- the theme of this campaign “will most likely be the fight against bureaucracy and corruption”
- The starting point for a new attempt to begin large-scale reforms, analysts believe, will be the second half of 2004.
With respect to energy sector reform
.-”The reform of the energy industry, for example, is in general more of a political issue than an economic one. If Chubays loses the confrontation, it will be reflected not so much in the RAO as in his own image as a heretofore successful manager and lobbyist. This, of course, can only hurt the party of which he is cochairman.”
Description of Source: Moscow Nezavisimaya Gazeta in Russian -- Daily Moscow newspaper aimed at an elite audience and controlled by Boris Berezovskiy.]
4) Putin aide upbeat on 2003 Russian budget, criticizes energy sector reform
economic adviser Andrey Illarionov comments on the economist situation in Russia
He accused UES of increasing electricity tariffs quicker than fuel oil prices>He seem to suggest that UES managers have attributed themselves large perks (other expenses budget line of UES went up 1.5bn dollars”
Also “Illarionov slammed the proposed energy sector reform as pursued by the UES.”
“Speaking about the foreign economic investment to Russia, Illarionov said that it went down 10 per cent in 2002 against the last year. This is a symptom of deteriorating tax situation in Russia, he said.”
Illarionov has repeatedly dismissed the necessity to increase electricity tariffs advocated by Chubays. I guess is part of electoral populist rhetoric. Putin&co do not want to be associated with increase in electricity prices in the electoral year.
5) Special Interests Accused of Delaying Russian Electric Power Reforms
CEP20021218000315 Moscow Kommersant in Russian 18 Dec 02 P 14
-Kommersant's source suggested that Mr. Deripaska and Mr. Abramovich are “intentionally putting off the period of reform in order to continue to use cheap energy at a preferential price. (…)putting off the reading until spring will automatically put off RAO YeES reform for
several years, since it is simply senseless to count on the deputies passing unpopular reforms in an election year”
- “Other conjecture was also heard yesterday: dragging out the reform will lower the market value of RAO shares (they fell almost seven percent in the last two days), which the aluminum people will not fail to use because it is generally recognized that they are buying up the energy holding company's shares.”
6) Russia: YeES CEO Chubays Comments on Power Industry Reform -- GRAPHICS
CEP20021217000272 Moscow Ekspert (Internet Version-WWW) in Russian 16 Dec 02
Chubays on the power energy sector(Interesting article overall!!) Main issues
- Effects of cross subsidization:in the presence of cross subsidization practiced by Energos large industrial consumers migrate to FOREM, where the price is lower. The withdrawal of 2-3 such big consumers means a huge loss in revenues for the Energos. They will try to compensate by increasing dramatically increasing the price to residential and small consumers by 2-3 times which is “unacceptable”. Last year the scenario was just a theory, this year the treat is credible. His solution ( see below) is not very clear to me.
- Coal prices are not expected to rise
- Gas price: “According to the results of 9 months of this year, gas prices rose by 40 percent--up to 70-85 rubles (R) per 1,000 cubic meters. Our tariffs have increased by 27 percent. That is, gas prices are growing faster than our tariffs. This tendency will also probably be retained in the future.”
-Gazrprom reform ( reporter asked if gas should not be reformed prior to the reform in the electricity sector) >Chubays does not think so. “Regulated prices on gas make it possible to make a smoother transition to the market in the electrical power industry. We will organize the market and we will attract investments into construction of modern effective capacities--primarily those based on the steam-gas cycle. As a result of this, the consumption of gas will be significantly reduced, and the effectiveness of its application will be increased. This is also to the advantage of Gazprom itself.”
“On the other hand of course, it would be better for us to have fuel at market prices at the outset--not only coal and fuel oil, but gas as well. For us, regulation in the gas sector means not only prices below world prices, but also limitations on provision. Investors come to me who are ready to build gas refineries. One of the first questions they ask is: What will happen with gas provision to these plants? Market relations in the gas sector will give much freedom to the electrical power industry as well.”
-tariffs “Tariffs generally do not take into consideration the cost of invested capital.”
hydro generation Chubays thinks is has large potential in Russia but attracting private capital to build new hydro plants will be impossible without reform.
” On the whole, the coefficient for utilization of hydraulic resources comprises 17 percent, and for the Far East it is 3 percent.”
From the article
“But in reality, the picture today is just the opposite: Tariffs for the population are lower than for industry. Now let us put ourselves in the position of any major industrial consumer. He buys electrical energy from the local AO-energo [energy joint-stock company] at an average price of 80 kopeks (let us overlook the large disparity between regions), while the population buys it at 40 kopeks. The very difference in price is a reflection of that same cross subsidization. The industrial consumer, in buying electrical power from the AO-energo, pays more specifically because the population pays less. And the AO-energo itself buys the electrical power on the wholesale market at a price which is 1.5-2 times less. The average price on the wholesale market is around 35 kopeks. What will the major consumer do? He will run to FOREM, where as a result of the lower tariff he can get $10-$15 million a year in savings on expenditures for electrical energy. Imagine what a volume of resources an enterprise could allocate for resolution of all problems (legal and others) associated with this access to FOREM. And it will allocate this money. It will solve these problems.
The consequences for the electrical power industry are enormous: For the AO-energo, the withdrawal of one or two major consumers to FOREM means a loss of from 50-80 percent in revenues to the income articles of the budget, specifically because the one leaving is the one who bore the burden of cross subsidization. In the existing system, the only method of somehow combating the decline in revenues is by shifting the additional tariff load onto the population and onto small-scale consumers. This would entail explosive, catastrophic, consequences: Growth of tariffs for the population in specific regions and in a specific situation by 2-3 times, generally without any preparation and without any compensation whatsoever. This is an absolutely unacceptable scenario of development, but its threat is real. While even last year this existed at a level of theoretical considerations, today major companies are already undertaking specific actions to access FOREM. We are trying to hold back this avalanche, but our efforts will not last long. Immediate solutions are needed.”
” We favor a gradual, step-by-step resolution of this problem. A schedule of changes in tariffs by groups of consumers must be compiled for each energy system, for a period until total liquidation of cross subsidization is achieved. At the same time, measures for targeted social protection of specific categories of the population must be implemented. Major consumers should not leave the energy systems during this period. In order to reduce expenditures for electrical energy, they will have the opportunity to buy it in the unregulated sector of the wholesale market. We have an entire set of proposals and, seeing the acuteness of this problem, we have sent them to the government. Furthermore, energy producers will have to seriously reduce expenditures, and this will hold down the growth of tariffs.”
7)Russian Duma defies government to pass amended law on electricity tariffs
The law envisages that the government sets electricity and heat tariffs once a year, before the draft federal budget for the next year is adopted in the first reading.
8) Russia: Duma sets maximum electricity, heat tariffs
The State Duma adopted a Federal Law which provides for the establishment of maximum electricity and heat tariffs every year, until the lower chamber of parliament adopts after first reading a draft budget for the next year.
The new law says, however, that the changing of the tariffs during a financial year without the government submitting a corresponding proposal to the Duma will not be permitted.
9) Russian power grid chief hints at political uncertainty over reform
CEP20021218000441 Moscow NTV Mir in Russian 1900 GMT 18 Dec 02
Abstract: Chubays thinks there are two reasons for the delay in the adoption of the reform package. 1) Economic: a group of businessmen is trying to acquire 25% of the company and they are interested in lower prices for the share. (For me is not making much sense. The second time the reform was delayed in the same month prices fell again. Or, by that time this conspiracy theory was well known to the market. Why would the shareholders sell if the delay is only a political maneuver? May be the market is afraid on the influence that this guys will have on the company once the buy the 25%, especially with respect to the rights of the other shareholders.)
2) There are some political interests of some players to delay Chubays reform (Illarionov continues to support the creation of vertically integrated companies. We though that they agreed on a compromised last year but it seems they did not) Chubays does not specify why these people are interested in delaying the reform.
From the article
Chubays is explaining the delay of the reform package
“Fact one. A considerable package of UES shares is being bought up on a large scale at a cost of several hundreds of millions of dollars. All analysts recognize it. There is no doubt on this score.
Secondly, the same analysts affirm with one voice that the operation is not over yet, that the purchases are continuing and that the aims of those responsible clearly go beyond the present volume of buying. In other words, this means that a similar amount of money, perhaps more, has to be spent to complete the operation. If that is so, it means that those who will continue to buy up the shares undoubtedly and by definition have an interest in getting as cheap a price as possible.”
“I think the figure of 25 per cent would signify a complete change of the ownership structure in the company. And even if you take this modest figure as a benchmark, at the present share value you have to spend approximately, well no less than, 700m-800m dollars to bring the existing stake to this level.”
“ [Reporter] As far as political dividends are concerned, what political dividends do you have in mind and who are these people?
[Chubays] I won't be giving away any secrets if I name the consistent opponents of the reform of UES. They are [leader of the Russian Federation Communist Party] Gennadiy Andreyevich Zyuganov, [presidential adviser] Andrey Nikolayevich Illarionov and [Yabloko leader] Grigoriy Alekseyevich Yavlinskiy. They are fairly well-known politicians who are consistently doing everything to slow down, repeal and halt the reform of the country's power sector. And if they don't manage to roll it back, they want at least to freeze it at the point we are at now.
By the way, it is an open stance of theirs. They come out with it directly; they express a certain logic. There is some logic here. It cannot be denied. But neither can you deny that these people have an interest in stopping the reforms; that is what these people are trying to achieve.”
“Reporter : Do you believe that among the people in the financial group that is buying up UES shares there are people capable of decisions of this sort, this sort of determined action?
[Chubays] They are very serious people. These serious people are deciding to spend half a billion dollars - a sum comparable to the annual budgets of two, three or five constituent parts of the Russia Federation. These people are capable of very significant actions. There's absolutely no doubt about it. Moreover, I have come across situations in my own political experience when two or three businessmen believed that they ran the country, and thought they would be making the decisions. Who's minister there? - No, change him. Whom do we have in the government team? - No, he doesn't suit us. I know this kind of logic very well. I have fought against this logic in rather tough situations. Frankly, what is emerging now replicates events of the recent past.”
[Description of Source: Moscow NTV Mir in Russian -- broadcasts programs from Gazprom's NTV network, as well as original shows, via satellite to the US, Israel, and elsewhere]
10) Threat of Postponed Examination of Power Reform Package in Russian Duma Reported
CEP20021218000105 Moscow Kommersant in Russian 12/17/2002 P 15
This article is interesting because it describes the amendments that the deputies have made to the original draft in the first reading.
“Specifically, the deputies increased a role of the state in the Trading System Administrator (ATS) -- at the stock trading market, where market prices of electricity will be set. They agreed to reduce from 75 to 50 percent the number of votes required by the YeES Board of Directors to make any decision on the company's reorganization (this will not allow reforms to be suspended half-way to suit interests of minority shareholders). The YeES head described as another sound decision the fact that although the deputies indicated in the draft law "On Electric Power Engineering" a need to increase the state share in the system operator and the Federal Network Company from the present 52 to 75 percent, they refrained from setting any dates”
11) Russian power grid shares collapse ahead of Duma electricity board debate
CEP20021217000370 Moscow NTV International in Russian 1900 GMT 17 Dec 02
Different story: The possible introduction of the reform package in Duma was the cause for the decrease in power grid company share prices. Reform of UES was announced by Chubays in March 2002.Since then the capitalization of Russian power grid fell dramatically.But, as far as I know the grid company shares are not traded separately from UES shares. The UES shares do not seem to follow the pattern suggested by the analysts cited in the article.
Capitalization of RAO YeES- This graph is from Chubays interview – nr.6 above
From the article
Aleksandr Korchagin, head of the analysis department of the Prospect investment company]
For the investors, the situation around the Russian power grid has been scandalous throughout the entire period of reform, since [its head Anatoliy] Chubays announced it [reform] in March 2002. The figures speak for themselves: since March 2002, the company has lost about 39 per cent of its capitalization, that is, 3.5bn dollars. This year, the power grid has lost about 4bn dollars while the dynamics has changed only after Chubays's announcement about a change of a moratorium on the sale of the assets.
[Sergey Komlev, head of the analysis department of the Eurofinance investment company] When the report came through at about 1630 Moscow time [1330 gmt], saying that the discussion of the packet of documents on the reform of the power grid will take place on Wednesday on 18 December, the market collapsed, including today's fall, literally by about 6 per cent. If we re-calculate this fall from the point of view of the cost of the power grid block of shares, this will mean that it will lose about 300m dollars of its capitalization. That is the cost of the issue.
Description of Source: Moscow NTV International in Russian -- broadcasts via satellite to the US, Israel, and other countries; features programs from Gazprom's NTV network and former NTV shows now being aired on Gusinskiy's TNT network and Berezovskiy's TV-6]
12) Russian Rail Enterprises May Be Allowed Access to Federal Wholesale Market for Electricity and Generating Capacity (FOREM)
CEP20021217000192 Moscow Kommersant in Russian 17 Dec 02 P 15
13) Russia: Electricity, gas tariffs to go up by 14-20 per cent in 2003
CEP20021216000116 Moscow ITAR-TASS in English 1213 GMT 16 Dec 02
Electricity and gas tariffs for the population will go up in 2003 by 14 and 20 per cent respectively, Georgy Kutovoy, head of the Federal Energy commission, said at a press conference in Itar-Tass on Monday.
According to his information, the tariffs will be increased in equal measure both for the population and for industrial enterprises. "The government adopted a resolution several days ago, which does not allow Gazprom to increase gas tariffs by more than 20 per cent," he added.
14) Gref Assesses Russia's Growth, Reform Prospects in Interview
CEP20021212000215 Moscow Ekspert in Russian 09 Dec 02
Abstact -Gref on reform on power market: Gref does not think that after the reform tariffs will increase significantly. He does not think that they should approach European countries level, because the costs are lower in Russia.
From the article
“I will try very briefly to formulate our basic approaches. First, the package of laws that is now in the State Duma puts off the liberalization of the market. It will take at least two years from the time the law is enacted until a market is introduced. If, let's suppose, the package of laws is enacted early next year, then realistically it will take until mid-2005 to prepare a huge number of statutes and to create a new market infrastructure in order to put the law into effect. It will take these two years to create and set up a workable market mechanism for the sector, including the built-in risk regulators you refer to. I wouldn't dramatize the situation regarding a sharp rise in tariffs. The price of electricity for industrial customers in a whole host of regions is already pretty high right now. For example, in the Central Region it is about 70 kopeks, or more than 2 cents. In the European countries, with their costs, it is more than 4 cents. Even after the reform of the industry the price in our country should be lower. After all, Russia has a fairly high proportion of relatively cheap nuclear and hydraulic energy. I believe the tariffs should drop in a number of regions after the transition to market pricing. I don't think the reform of the industry will entail any shocking consequences for business and the public. No one has a stake in this, regardless of whether our government carries out the reform of the power industry or another government does.”
[Description of Source: Moscow Ekspert in Russian -- Weekly business magazine known for its reporting and analysis of financial-industrial groups and their political interests, partly owned by Vladimir Potanin.]
15) Russia: Commentary Views Delays in Implementing Gref Reforms
CEP20021212000224 Moscow Vedomosti in Russian 04 Dec 02
“In other words, as the real political positions of the Putin command have steadily grown stronger, the political support for reform within the command itself was reduced. Today, in its political rhetoric, questions of structural reform are obviously unpopular”
[Description of Source: Moscow Vedomosti in Russian -- Business paper published jointly with The Wall Street Journal and Financial Times; reportedly friendly with Kremlin.]
16) Russia: Proposed 2003 Electricity Tariff Increases Detailed
CEP20021213000097 Moscow Kommersant in Russian 11 Dec 02 P 18
-“the increase in the electricity tariff for federal power stations operating on coal or fuel oil will, according to the Russian Ministry of Economic Development and Trade proposal, be 3.01 percent, as against the stations' planned 19.9 percent. “
-“The increase in the electricity tariff for federal hydroelectric power stations in 2003 will, according to the Russian Ministry of Economic Development and Trade proposal, be 88.46 percent, as against the stations' planned 103.91 percent”
-“The increase in the tariff for gas-powered federal power stations in 2003 will, according to the Russian Ministry of Economic Development and Trade proposal, be 31.03 percent, as against the stations' planned 49.71 percent”
-"The overall increase in tariffs for the YeES Rossii [Unified Energy System of Russia] Russian Joint-Stock Company's 29 federal stations will be 25.97 percent compared to 2002."
17) Russian Duma Schedules Second Reading of Energy Reform Bills for 18 Dec
Kovalyov, chairman of the Duma committee for parliamentary procedure, on energy reform bill:
-“Members of parliament have introduced about 2,000 amendments to the package since the approval of government-sponsored concept of energy sector reform, and the lower house and government officials have come to agreement on most of them by now, Kovalyov said.”
The amended versions of the bills take account of virtually all proposals and I do not see any major problems with their endorsement," he said.
The revised texts of the bills contain guarantees of interests of small producers and distributors of electric power and specify procedures of property redistribution in the energy sector, Kovalyov said.
The deadline by which the most revolutionary changes will take effect has been moved to 2005, he indicated. Simultaneously with it, the government will keep in effect provisions on regulating the electricity rates and state control over the activity of natural monopolies.”
18) Russian 'Oligarchic Grouping' Seen Rumored Buying Up YeES Shares Ahead of Reform
CEP20021202000333 Moscow Gazeta in Russian 02 Dec 02 P 9
Abstract: It is a fact that a group of Russian investors are buying a large amount of UES shares. (aim at 25%) UES bosses blame president adviser Illarionov speech at economic form in Boston in mid-November for the drop in UES prices. The drop served well the groups that were already in the process of buying UES shares. Illarionov role in the share price decrease is however controversial.
“Holding company bosses believe that the report made by Presidential Adviser Andrey Illarionov caused a crash in the prices of the company' shares. Foreign investors began to actively get rid of their ADRs [American Deposit Receipts], which played into the hands of those who are buying up shares in Russia.
RTS [Russian Trading System] trading data over the past period fits this version. Judging from the graph, the shares' active growth began on 11 November. At the time the shares cost 11 cents. Company Chief Anatoliy Chubays's report at the Boston economic form warmed investors' interest and the shares went up to $0.126. But immediately after Illarionov's speech they collapsed to $0.1177 by 20 November.
But the collapse was followed by a new growth that continued until the end of last week. Last Friday the share price came to $0.125. So at first sight the company bosses' version has convincing confirmation.”