Khristenko: UES Sales May Not Start Until '06
By Lyuba Pronina
Industry and Energy Minister Viktor Khristenko on Wednesday brushed off investor concerns that UES reforms had been shelved, but admitted that the eagerly anticipated privatization auctions for the power monopoly's choicest assets will not happen anytime soon.
The Cabinet was scheduled to finalize a privatization plan for UES' generating assets and other details of the industry's restructuring on Dec. 2. On Monday, however, the meeting was postponed until Dec. 16, and Tuesday it became known that privatization was taken off the agenda.
"There is nothing negative about what is going to be discussed at the government meeting," Khristenko told reporters after a meeting of a government commission on energy reforms.
Nonetheless, Khristenko said preparing the assets for sale could take until the middle of 2006, seeming to confirm market fears that no auctions will take place next year.
"It just means that the goods will be sold when it is clear where they will be sold, on what bazaar it should be done," Khristenko said, referring to the 10 wholesale generation companies, known as OGKs, that are being created from the more than 70 UES generating assets. The six that will be auctioned off are considered the cornerstone of sector reform.
"The issue is when, what and under what conditions. The talk now is about [how] ... they have to be prepared and packaged," he said.
Media reports Tuesday about the delay sent UES shares down as much as 5 percent. Industrial groups have been buying up UES shares in anticipation they will be able to use them as currency in the auctions.
News of the delay prompted Aton brokerage to cut its rating on UES to "hold" from "buy." But Khristenko said he does not share the market's pessimism.
"It is more important for those who will come to this business to clearly understand on what conditions and rules they will function," he said.
Fyodor Tregubenko, an analyst at Brunswick, said it was clear reforms had been stopped when it became clear last month that gas monopoly Gazprom had acquired a 10 percent stake in UES.
"It would have been naive to expect radical decisions from the government at this point," he said.
