Dmitry Akhanov, director of the Federal Energy Agency, speaks about changes in the agency's operations A new head of the Federal Energy Agency (Rosenergo) was appointed in late November. After the RAO UES of Russia reorganisation in July, the agency is to undertake part of the holding company's functions and simultaneously continue work in the coal, gas, and oil industries. In his first interview as head of the agency, Dmitry Akhanov told Kommersant what Rosenergo will now be responsible for and what matters power companies, now private ones, will have to finalise with it. Kommersant: What was the condition of Rosenergo when you came to it? Dmitry Akhanov: A good question. In point of fact, it was a working agency performing its functions in at least three sectors: coal, oil, and gas. With a so far rather weak, but actively developing electric power unit. Of course, there is something to improve, much should be changed and adapted to present-day realities. Yet on the whole I came to have an operative structure: 220 people on the organisation chart in Moscow and around 108 in seven territorial divisions. K.: What is Rosenergo today? What are its functions? D.A.: The agency implements the functions of state control in fuel and energy sectors: coal, gas, oil, and electric power. This is state property management, implementation of state programmes for development, efficiency improvement, and investment. Of course, there are differences between sectors. For example, there are no more state assets in coal. The last ones were sold just a while ago. On the one hand, management of private property is impossible, but on the other hand, this is not exactly so. A government programme for the completion of the reorganisation of the coal industry to 2010 has been approved. It suggests the closure and abandonment of mines, relocation of miners from northern areas, environmental monitoring in regions, etc. The total amount of funding will exceed 40 billion roubles, including almost 14 billion roubles this year. Besides, we are simultaneously designing targeted development projects, for example for the Elginskoye deposit in the Republic of Sakha (Yakutia) or the Elegestinskoye deposit in the Republic of Tyva. As a specialised agency we precisely monitor plans of all coal companies: how much coal they intend to mine, what mining operations they intend to conduct, and besides, we implement the emergency response function in the coal industry. We have subordinate enterprises that are de facto mining rescuers. They attend any emergencies and incidents that occur at mines. K.: How about the power industry? D.A.: The situation in the power industry is quite different. The key activist there is currently RAO UES. However, the situation will dramatically change after July 1. Apart from state-run companies such as Federal Hydropower Generating Company (FHGC), FGC (OJSC Federal Grid Company - Kommersant), System Operator (OJSC System Operator Central Control Directorate - Kommersant), the IDGC (interregional distribution grid companies - Kommersant) Holding Company, and RAO Power System of the Far East, there will be private ones: all thermoelectric power generation and sales. So the task for Rosenergo, based on RAO UES of Russia's experience and on our own experience in adjoining fuel and energy sectors, is to develop an optimum system for power industry control with account for state priorities. Currently we are working with agencies and companies to sign a regulation and to develop a system for control over state companies via corporate mechanisms. When there is such leverage, the government does not actually need other tools to manage them. K.: What are plans in respect of private companies? D.A.: Our task is to establish a system for supervision over private companies for the benefit of the state in areas important to it, such as reliability and safety of the power system, without, however, exercising tough control of the industry. It is important not to press too much here, not to overregulate, so to speak. The government will control the situation and manage in the first instance with the help of mechanisms and rules, not direct influence on private companies. I would like to emphasise: the power industry is a strategically important sector in terms of state priorities. And in spite of liberalisation, government control therein should be expanded and mechanisms made stricter, which we have seen in Western countries which have undergone liberalisation. As for oil and gas, the system for state property management at this stage has already been shaped and government policy in the sector is implemented, inter alia, via investment projects. K.: Are you going to expand Rosenergo powers? What is your potential in this area? D.A.: In coal, for example, we do not need any additional powers. We will not request them for oil and gas either so far. In terms of electric power, everything RAO UES is doing today for the industry will be transferred to us after July 1. We believe it correct and we will certainly be forming a powerful unit for management of state property. Rosenergo should become a point where the positions of ministries and agencies on the shaping of policy for state control of strategically important companies in the industry will coincide. Here should decisions be worked out and directives be issued for the boards of directors of companies with government participation. Many issues considered at meetings of the boards of directors of companies such as FGC or System Operator are not only of a corporate nature: they are decisive for the industry as a whole and concern all parties to the power industry, both suppliers and consumers. Directives are not only a method to control business, but also a mechanism to control the industry proceeding from state interests. K.: How do you intend to change the agency structure? D.A.: Apparently, there will indeed be some changes. This goes first of all for the consolidation of the power industry unit. I would not call it reorganisation, but tweaking. K.: Will you employ anyone from RAO UES? D.A.: I have. For example, my deputy for electric power came to work here from RAO UES of Russia: Andrei Lukin, a power industry professional who has worked at a state district power plant (GRES) for longer than nine years and in the last two years has been involved in regional power industry development programmes. My mission is to create a team of professionals. Therefore, in selecting people I am not interested in where they have worked before, but in the level of their personal professionalism. K.: RAO UES head Anatoly Chubais said you will take away people from the holding company... D.A.: I can say that I am behaving quite modestly in this respect. I am trying not to depopulate those fronts where RAO UES currently needs people. One should admit though that today it is difficult to build a professional team in the power industry without them, for RAO UES currently employs over 70% of Russian power industry professionals. K.: Will you employ anyone else after RAO's reorganisation? D.A.: Maybe. However, how many people work with the agency and where they come from depends directly on the scope of objectives set to us. First we determine what and how we do, what we need for that, and begin to do that, and then we request additional resources for that, including human resources. At present, our managerial task is to work in parallel with RAO UES. By gradually taking away more and more responsibility and actual work from them we would like to secure continuity and stability. We have already begun to work on all emergencies in parallel with RAO UES in order to have polished mechanisms for prompt interaction with companies in the industry long before July 1. K.: That is, it is you who should be called in the event of a blackout? D.A.: Our mission is to prevent this. However, if something nonetheless happens, one should first call his monitoring officer, and then us. K.: It turns out that Rosenergo is now first of all a power industry agency? D.A.: No. My coming to work with it is due to the fact that from the point of view of the tasks currently facing the government, the power industry is one of the key priorities. And, the scope of state control in the power industry even in five or ten years will be greater than in oil or coal, for instance. No one, however, has cancelled or is going to cancel our task for managing the oil and gas industry. We are facing objective starting from corporate governance of state property, interaction with Transneft and oil companies in work on international projects and optimisation of loads and the system of freight traffic in the country and ending with strategic tasks for reducing the amount of petroleum gas burning and PSA (production sharing agreements - Kommersant) projects where we are responsible for Russian participation. K.: Is it true that your predecessor, Sergei Oganesyan, did not work on power industry-related issues at all while with Rosenergo? D.A.: I would not say so. It is just that the scope of tasks the agency is facing today and will face after July 1 has multiplied. And first of all in the power industry. K.: Will you have some influence with market participants? Can they do something at all in the industry without your consent? D.A.: We have several mechanisms to influence the market and its participants. First of all, via decisions of state-run companies. The government will be implementing its policy via direct participation in corporate governance of state-run companies, including via directives for board of directors members. The second mechanism provides for control via industry operation rules established by resolutions and directives of the government and orders of relevant ministries and departments. The third one is via the Market Council non-profit-making partnership where the government has the majority stake in the Supervisory Board which develops detailed rules for and requirements to participants in the wholesale power market (For details, please refer to the interview for Kommersant, by Dmitry Ponomaryov, head of the Trading System Administrator non-profit-making partnership, dated January 31). And this is a kind of a universal instrument which can work on either the economics or technical supervision or reliability control. The fourth one is direct government investment or, more precisely, the strategy for the distribution thereof. The fifth is the mechanism for forming a technological capacity reserve and providing investment guarantees. And finally, via antimonopoly control. The government can always prohibit something and allow something else. So the art of public administration consists exactly in prohibiting or allowing something not too often. Yet in spite of all of the above-said, Russia remains one of the most liberal countries in terms of government control of the power industry. I can say that we are probably the world's only nation that has no practice of issuing permissions for building power stations. It exists anywhere in the world, but we do not have it. K.: Is this just unnecessary? Or is it historically so in this country? D.A.: Historically, the system of control has developed differently in the country. K.: Will no permissions be necessary in the future? D.A.: This depends on whether we can find other ways to implement government policy in terms of the structure of capacity. There is no system of permissions in this nation's power industry simply because there have never been private investors that would build these power plants. However, I hope that we will not need to introduce such permissions and that we will be able to achieve the desired targets in terms of the fuel balance and the efficiency of newly-commissioned facilities with the help of other mechanisms. K.: Will Rosenergo be an intermediary between power companies and fuel suppliers, for example gas companies, as they are usually unable to agree? D.A.: We are de facto such an intermediary. On the one hand, we develop forecast fuel and energy balances and we understand how much gas, coal, and fuel oil there is in the country and how much of this is required for the power industry. On the one hand, all issues related to interaction between Gazprom and power companies are poured out on Rosenergo. Those decisions that were passed with reference to transition to equal profitability of domestic and export gas prices by 2011 have stripped Gazprom of the motivation to refuse to supply gas to the domestic market. The monopoly is working on its investment programme. We are waiting for proposals as to how they intend to work on problematic issues. In other aspects, we have seen Gazprom having actually satisfied all power industry requests. Therefore, our main task is not to solve problems manually, but to develop a system that would enable companies to settle problematic issues by themselves, based on priorities of state and the economic interests of the business community. At the same time, investment programmes and the fuel balance are in the future to be harmonised through economic decisions of energy companies themselves. Who would like to build a power station should apply to Gazprom with a connection request, while the monopoly will conceive its investment programme proceeding from such requests. The task for Rosenergo is to ensure transparent and clear rules that will enable such a system to be efficient. K.: Will you participate in developing major documents such as the layout of the locations of power industry facilities to 2020? Will you work on as major projects in other sectors: coal, oil, and gas? D.A.: Certainly, coal, oil and gas development plans and forecasts will be designed. They will possibly be less detailed than the general layout of the locations of power industry facilities though. For these sectors operate in a different manner. K.: Will private investors have to obtain your approval for new transactions and building power plants? D.A.: We will express our attitude towards transactions in any case, especially towards major ones. In terms of investment programmes, they will not have to obtain our approval for every detail, of course. However, we will certainly shape some matters such as contracts for the provision of capacity between generating companies, the TSA (Trading System Administrator - Kommersant) and System Operator and decisions on the rescheduling of commissioning deadlines or change of the facility type. Simply because we are the relevant agency which understands what the nation as a whole needs in this respect in terms of power system reliability. In the future, proceeding from System Operator's proposals, we will make decisions on what amounts of capacity are to be purchased in the market and what requirements to this capacity are to be put forward. K.: Is the government directive on the launch of the capacity market ready? D.A.: The transition rules for the capacity market are currently in the Justice Ministry. They are to be tabled in the government in the near future. K.: Does Rosenergo have an opportunity to get laws through independently or via the Industry and Energy Ministry? D.A.: The agency is not entitled to independent legislative initiative, unlike the ministry. However, this does not prevent us from drawing up and sending our proposals to the Industry and Energy Ministry, so that it introduces a bill, directive, or instruction we have initiated for consideration of the government. K.: Is there any vision of what documents are necessary? D.A.: Firstly, we hope that the government's power industry action plan will finally be amended in the near future. It lists a great number of documents to be developed and passed this year, starting with regulations for the government system for planning and forecasting in the power industry and ending with renewable sources and energy efficiency issues. In terms of gas, for example, we would like by the end of the year to see the strategic programme for abolishing state control over liquefied hydrocarbons (the matter is about supplies of gas to the national market for domestic needs - Kommersant) at the approval stage. Perhaps, we will submit our proposals for improving the oil export system along with Transneft. K.: What does "improving" mean? D.A.: This means improving the decision-making system in terms of its optimisation. K.: Are new tenders under the guaranteed investment scheme being conducted and what about new sites and contenders there? D.A.: We are having two tenders currently: one for Tarko-Sale in the Yamal-Nenets Autonomous District and one for Serov GRES. Tarko-Sale is already at the second stage. K.: Are there many contenders? D.A.: There are four contenders who have passed the qualifying round of the tender where basic parameters are assessed, first of all the ability to carry out this project. The first stage of the Serov tender will be over in February after which we will start the second selection stage. K.: When will the tender be completed? D.A.: In June. K.: Will there be any new directives, decisions in the near future? D.A.: Firstly, after launching the capacity market we are to launch the market for system services. Then we will be developing a transparent methodology and process for connection of power plants and consumers to the grid. This is the key task in 2008. Thirdly, we are to comply with those new provisions that are in the power industry law with regard to renewable energy sources: decide what these are, how we will stimulate them, how we will pay for them, and how we will structure our work in this area. For we are already eight to ten years behind Europe in this respect. Experience shows, however, that we can and know how to move faster than them. Fourthly, we will certainly have to develop a system of approval of investment programmes for state-run companies and natural monopolies, i.e. for FHGC, FGC, and others. Fifthly, we are facingn the task of approving a new pricing scheme in the distribution grid sector in terms of RAB transition (the use of an internal rate of return mechanism - Kommersant). We would think it correct to launch three or five pilot companies from July 1, increasing the number of participants from January 1, 2009. I believe that transition to this system is of critical importance because it is a backbone factor for launching the investment process in the distribution grid. K.: Are you going to mark the RAO UES reorganisation on July 1? D.A.: I think that it is RAO UES of Russia that will celebrate July 1 in the first instance. I will be pleased to join them, if invited. It would be logical though for me and all agency employees to be at work on July 1 and to take over the RAO UES functions. K.: Anatoly Chubais promised to open on that day more than one box of champagne lost to him by those with whom he has bet on whether or not the reorganisation will occur. D.A.: I have always believed that the reorganisation will be a success. |
