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Russia: Chubais May Take Over Energy Company

Moscow, 31 March 1998 (RFE/RL) -- The future of former First Deputy Prime Minister Anatoly Chubais is uncertain after Acting Prime Minister Sergei Kiriyenko ruled out the possibility of him becoming chairman of the board of Russia's national electricity company Unified Energy Systems.

But many now believe Chubais is set take over as the company's chief executive, which would involve him in the day-to-day operations of Russia's debt-ridden energy sector.

Kiriyenko told NTV television Sunday that Chubais would not be allowed stand as chairman of the board because he no longer holds a government post. He said that "The chairman of the board must be a representative of the state."

Chubais was dismissed in a cabinet shake-up last week, but was still considered a top contender to take over at UES, Russia's largest company by sales. Before the cabinet reshuffle, the government had nominated Chubais to be elected chairman of the board of directors at a shareholders' meeting on April 4.

The post of chairmanship is a more ceremonial post that would involve overseeing the government's majority stake in the company. The position of chief executive is a full-time job that would involve implementing the government's reform plan for the energy sector.

Reformers and Soviet-era directors at UES have clashed in recent months over management of the company. The government is looking to replace the current chairman of the board Anatoly Dyakov, who tried to oust Boris Brevnov, a young banker brought in last year by First Deputy Prime Minister Boris Nemtsov to clean up UES, from his post as CEO last January.

Brevnov has been weakened by allegations of corruption. He has denied the charges, saying they were sparked by his moves to root out abuses at UES.

Kiriyenko, formerly fuel and energy minister, did not say whether the government might consider Chubais for chief executive at UES, but analysts and government sources said he had all but locked up the appointment.

Chubais, speaking on Russian television Sunday evening, said he still had the support of President Boris Yeltsin to take the reins at UES and accused business tycoon Boris Berezovsky of making "hysterical" comments regarding plans for him to take over at UES. In his words: "This is understandable because the president and the government are adopting decisions that are not to Berezovsky's liking."

Analysts said the government is likely to appoint Chubais as CEO of UES this week before the general shareholders' meeting scheduled for Saturday.

UES, a benchmark on Russia's stock market, has been crippled by debts stemming from the web of non-payments in the economy. Analysts said if Chubais took over as CEO, it could speed up reforms at the energy giant.

Brevnov's efforts to reduce energy tariffs for industry and reduce the company's debts have been applauded, but Chubais is expected to have more authority to push through key reforms. It is unclear whether room could be made for Brevnov to stay on in some capacity at UES.

With Chubais out of the running for chairman of the board, the field is now wide open. Shareholders have nominated 30 candidates to the 15 member board of directors, but the government is expected to have the final say on who becomes chairman.

Possible candidates to take over the chairmanship include Deputy Economics Minister Nikolai Shamrayev, Deputy Property Minister Alexander Beloyusov, and Deputy Fuel and Energy Minister Viktor Kudryavy.

Kudryavy, who worked under Dyakov when he was the head of UES, is considered a possible compromise candidate. As one analyst put it: "The government needs to be careful to have a balance between conservatives and reformers in the company."