This may reduce their value before sale A public tender for selecting the power supplier of last resort has been summarised in the Leningrad Region. The winner was RKS-energo. RAO UES of Russia-controlled St Petersburg Sales Company (SPSC) which lost the tender decided to dispute the same already when it was announced and filed a corresponding lawsuit to the Court of Arbitration of St Petersburg and the Leningrad Region. Analysts believe that RAO UES will encounter difficulties when trying to sell its sales assets without a supplier of last resort status if other constituent subjects of the Russian Federation make use of the experience of the Leningrad Region. The supplier of last resort status in the Leningrad Region was granted to RKS-energo LLC on Friday. Apart from RKS-energo, the public tender involved SPSC, Transneftservis-S LLC, and Tyumen Power Sales Company. The only condition was the price for the services of the sales company, according to the Leningrad Regional Tariff Committee. The most expensive offer contained in tender documents was 580 million roubles a year. However, there is no knowing which of the participants offered that amount or how low was the price which RKS-energo asked for its services. RKS-energo LLC unites sales structures based on municipalities in the Leningrad Region. The company is registered in the town of Tosno, according to the SPARK information system. One hundred per cent of RKS-energo shares belong to CJSC Breeze which is in turn owned by private individuals. The supplier of last resort status empowers the sales company to service all private consumers of electric power in the region. The supplier of last resort also has an advantage when new consumers are connected to the grid. In fact, it controls all payments for electric power shipped, distributing funds between grid and generating companies and retaining a sales mark-up. Private consumers in the Leningrad Region consume around 1.6 billion kWh. Given the current price of 1.5 roubles per 1 kWh, over 2 billion roubles will be channelled through the supplier of last resort. RAO UES-controlled SPSC is unhappy about the tender results. Back before the envelops were slit open, in early August, the company had filed a lawsuit to the Court of Arbitration of St Petersburg and the Leningrad Region in which it disputed the legality of the tender. The matter is that the Industry and Energy Ministry has not to date produced regulatory documents to govern the organisation of the procedure for selecting the supplier of last resort. Without these, the tender procedure is illegal, thinks SPSC. Opening arguments at the suit will be held today. The company also intends to file another lawsuit to dispute the results of the tender. "We disagree with the results. They have been rigged. The court will judge us and it will certainly find it impossible to overlook grossest violations of the tender procedure. In particular, its conditions were altered," SPSC development director Alexander Merkulov explained to Kommersant. The two other participants which lost the competition yesterday declined to say to Kommersant whether they will dispute the results. The Leningrad Regional Tariff Committee told Kommersant that RKS-energo asked the lowest price for its services, which enabled the company to win the tender. "The tender was held as per government directive no 530 ‘On the Organisation of the Functioning of Retail Markets...' As for Industry and Energy Ministry directives that have not been issued to date, they do not govern the tender procedure, but only describe the rules for transferring the supplier of last resort status from one company to another," says Kommersant's source in the government of the Leningrad Region. However, a Kommersant source close to RAO UES assures that this is a provocation and "SPSC offered the lowest price." The Kommersant interlocutor reminded that tenders for selecting the supplier of last resort have so far only been conducted in Nizhny Novgorod and the Sverdlovsk Region, and solely on the initiative of the local government. In the first case, the tender also ended up in a court of law, while in the Sverdlovsk Region it was declared invalid. Nevertheless, Finam analyst Semion Birg believes that the tender in the Leningrad Region may become a precedent for other constituent subjects of the Russian Federation. "This is a serious blow on RAO UES which intends soon to sell its sales companies. Losing the competition may negatively affect the value of SPSC," explains analyst Semion Birg. The value of SPSC is estimated at approximately $200 million currently, while all of RAO UES's sales assets are estimated at $2.3 billion, according to him. In terms of the starting price, SPSC is in third place after OJSC Mosenergosbyt and OJSC Tyumenenergosbyt. "Without a supplier of last resort status, it will be difficult for RAO UES to sell its sales companies," assumes Mr Birg. Uralsib Investment Company analyst Matvey Tayts explains that the supplier of last resort status means that the company has a stable client base, which is significant for its value. A Kommersant source close to RAO UES agrees with that. The power holding company has scheduled another stage of selling its sales subsidiaries for September. Investors will be offered 11 companies. |
