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Russian, Italian electricity giants sign cooperation memorandum

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MOSCOW, June 13 (RIA Novosti) - Unified Energy System (RTS: EESR) and Enel SPA have signed a memorandum on cooperation, the Russian and Italian electricity giants said in a joint news release Tuesday.

Enel's strategic is goal to invest in the Russian holding's wholesale or territorial generating companies (WGCs or TGCs), up to a blocking minority of 25%+1 share, the statement said.

The memorandum signed by chief executives Anatoly Chubais and Fulvio Conti "underlines the interest of both parties in the dynamic development of the Russian electricity sector and its restructuring aimed at attracting investments for the construction of new generation capacity and the modernization of existing generation capacity," the companies said.

The document stresses the Russian holding's interest in attracting strategic investors into Russia's electricity sector.

Russia's power sector has undergone radical changes in recent years aimed at increasing the efficiency of power plants and developing the industry by attracting investment. During the restructuring process, specialized structures have been created in place of the old vertically integrated companies.

By the end of the reforms, potentially competitive parts of the industry - generation, sales and repair companies - will become mainly private and will compete with each other. However, natural monopoly functions - power transmission and dispatching - will remain state-controlled.

Generating assets have been consolidated into interregional companies of two types: seven wholesale generation companies (WGCs) and 14 territorial generation companies (TGCs).

WGCs comprise power plants specializing in electric power generation based in various regions to prevent monopolies forming. TGCs contain predominantly combined heat and power plants in neighboring districts.

Following the agreement with Enel, UES will propose pilot investment projects involving WGCs or TGCs, providing Enel with detailed project information and enabling the Italian company's specialists to visit the sites.

Once an analysis is completed, Enel will assess the feasibility of becoming a shareholder in the WGCs or TGCs by participating in the proposed investment projects and will present financing proposals to UES, the joint statement said.

The companies have set up a joint working group to ensure coordination.

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