MOSCOW, February 9 (RIA Novosti) - Unified Energy System's [RTS: EESR] board of directors Friday approved the sell-off of a 25.03% stake in wholesale generating company No. 5 (WGC-5) as a way of attracting strategic investment to the power sector.
The shares will be sold in a single lot at an open auction with a starting price of 24.66 billion rubles ($925 million).
As a result of the sale, RAO UES's share in WGC-5's charter capital will fall from 75.03% to 50%.
The auction is due in the second or third quarter of 2007.
WGC-5 is one of the six wholesale power generating companies established in September 2004 as part of UES's restructuring. Its plants are located in some of Russia's fastest developing regions, including the Urals.
The company's installed capacity is 8.67 GW, or 4% of Russia's total generating capacity, and its output constitutes 3.8% of the national total.
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.
Once reforms are complete, the potentially competitive sectors of the industry - generation, sales and repair companies - will become mainly private and will compete with one another. However, natural monopolies - power transmission and dispatching - will remain state-controlled.
The UES board of directors decided July 28, 2006 to restructure the holding in two stages.
During the first stage, UES will separate WGC-5 and TGC-5 and form WGC-5 Holding and TGC-5 Holding.
In the second stage, in 2007-2008, the UES parent company will be divided and its shareholders will receive shares of core assets (wholesale generating, territorial generating and federal grid companies) under current UES control, proportionate to their holdings in the monopoly's charter capital.
