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Russia: Government Nominates Chubais To Head National Electricity Company

Moscow, 11 March 1998 (RFE/RL) - The Russian government has nominated First Deputy Prime Minister Anatoly Chubais to the post of chairman of the board of directors at national power company Unified Energy Systems.

An UES spokesman said that his nomination, along with other candidates to the board of directors, will be voted on at a shareholders meeting on April 4. If approved, Chubais is expected to retain his cabinet post.

Chubais would replace Anatoly Dyakov, the Soviet-era director of UES who led a failed attempt in January to oust the company's reformist chief executive Boris Brevnov.

The nomination of Chubais to head the board has been welcomed by investors, who see the recent clash between reformers and the old guard at UES as a test of the government's commitment to cleaning up the debt-ridden energy sector. It is also viewed as a sign that Chubais' political fortunes are on the rise again after months of being sidelined and stripped of power within the cabinet.

The UES spokesman said the Privatization Ministry, charged with managing state property, had sent a letter to the UES board of directors last week recommending Chubais for the chairmanship. The government, which holds a 52.7 percent stake in UES, is expected to push through Chubais' nomination without any problems.

Most analysts said they do not see a conflict of interest should Chubais chair the UES board and maintain his cabinet post, as he would be overseeing the government's stake in the company.

The appointment would give Chubais a new position of power to replace his waning control over the Finance Ministry. As one analyst put it: "It is a very influential position. The power of UES is similar to that of [gas monopoly] Gazprom."

He added: "If Chubais has to leave the government at some point, UES would be a good opportunity that would not create speculation about his relationship to the FIGS," referring to Russia's powerful banking groups.

The nomination of Chubais is part of the government's moves to step up control over UES and remove conservative board members such as Dyakov who supported the bid to oust Brevnov. Shareholders have nominated 30 candidates to the 15-member board of directors, including Brevnov. Chubais allies Yevgeny Yasin, a minister without portfolio, and former bankruptcy commission head Pyotr Mostovoi have also been nominated.

Brevnov's position as CEO is not expected to be considered at the April 4 shareholders' meeting, but rumors of his imminent sacking continue to swirl.

The UES spokesman dismissed reports that Brevnov would be forced to step down in the wake of his clash with Dyakov. Brevnov, a 29-year old banker from Nizhny Novgorod, was brought in last year by First Deputy Prime Minister Boris Nemtsov to shake up the ailing monopoly. But he has been at loggerheads with Soviet-era directors opposed to his reforms.

Analysts said Brevnov, currently on a two week vacation, has looked less secure in his position since last week.

Boris Nikolsky, the Moscow city government's economic policy chief, lashed out at Brevnov last Thursday, saying he should be sacked for abuse of office. Brevnov has denied the charges.

As a UES board member, Nikolsky backed Dyakov's attempt to remove Brevnov in January, but he has not been nominated for re-election. Nevertheless, analysts said his attack, which came several days after a meeting of Mosenergo's board, was a sign that the powerful Moscow city government is clamoring for Brevnov's dismissal to balance opposing forces within the company.

Some analysts have said that Prime Minister Viktor Chernomyrdin, who has assumed responsibility for the country's energy sector, is unlikely to allow Russia's reformers to take complete control of UES. Chernomyrdin, a more cautious supporter of reforms, could try to install a member of the old guard as chief executive as a counterweight to Chubais.

As one analyst put it: "Brevnov is in a shaky position ... He has upset a lot of people during his clash with Dyakov."

Regardless of what happens to Brevnov, the move to put Chubais at the helm of UES is viewed as a sign of the government's commitment to reform the industry.

In the words of one analyst: "Chubais may try to get someone who could really pursue his reform policy ... There is no need for him to keep Brevnov. To keep him is just to save face for Nemtsov."