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FINAM - Express Comment - Electric Utilities - Mar 12, 2010.

News: Far East Energy Company may hand over the energy retail companies inherited after RAO UES reorganization to RusHydro.

Comment:

The idea of transferring to RusHydro share packages in the energy retail companies that were unsold during RAO UES' reorganization and are now on Far East Energy Company books surfaced with the arrival of Yevgeny Doda at RusHydro, who earlier managed to realize projects of the kind at Inter RAO (the purchase of OGK-1 and TGK-11 and the transfer to Inter RAO of their share packages on FGC and RusHydro books).

Should the project be brought to fruition, RusHydro may move up to first place in terms of productive supply from its-owned energy retailers. The company is already actively involved in the development of retail business around its-controlled Chuvashenergosbyt, Krasnoyarskenergosbyt and the Ryazan Energy Retail Co. We may note that Mosenergosbyt and the St. Petersburg Energy Retail Co. earlier aroused interest from other investors as well, such as Gazprom and Rusenergosbyt. Therefore, it is not ruled out that some of the retail companies will eventually be re-sold, which enhances the probability that an attractive buyout offer could be presented to minority shareholders.

In our view, the announcement may raise investor interest in shares of both RusHydro and the energy retail companies Mosenergosbyt, St. Petersburg Energy Retail Co., Saratovenergo and the Tambov Energy Retail Co., which would be managed by a professional strategic investor.

Grigory Yudashkin

Deputy Head

Private Investments Department

Finam Investment Holding

Daev Plaza Business Center

Daev Lane 20, office 209

Moscow, 107045, Russia

Tel: +7 (495) 604-8168

Fax: +7 (495) 604-8107

E-mail: yudashkin@finam.ru

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Publication:Russian Banks and Brokers Reports
Date:Mar 12, 2010
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