Gref Was Not Asked
Does Gazprom need the utilities?
Minister of Economic Development and Trade German Gref is not enthusiastic about Gazprom’s aspirations to become an integrated utility company. The fact is that Gazprom makes strategic decisions bypassing officials on the Board of Directors.
Chairman of Gazprom's Management Board Alexey Miller has announced that the gas monopoly already controls over 10% of the RAO UESR stock as well as a “significant block” of the major regional energy system Mosenergo’s shares. “We are building a multi-industry utility company, and after joining Rosneft we will work towards diversifying our business in the electric power industry,” Miller said in an NTV interview.
“You can’t choose your shareholders”, a RAO UESR representative remarked philosophically. He only added that officials had better decide whether one state-owned company has the right to buy the stock of another. But Gazprom’s far-reaching designs were a surprise even to government officials. But Minister of Industry and Energy Viktor Khristenko took no time to call them “logical” and approve. But the opinion of Minister of Economic Development and Trade German Gref was quite the opposite. “I don’t think it’s a clever idea to expand monopolistic activities,” as quoted by Reuters.
A subordinate of Gref’s adds that the monopolistic concern never sought the agreement of the Board of Directors (where Gref is a member), even though the ministry had repeatedly raised a question of where the investment money came from. “This happens every time Gazprom reports huge cash deficit and requests that tariffs be raised”, the official explains. Meanwhile, 10.5% of the RAO UESR stock cost $1.4 bln. (RTS Friday); according to Gazprombank, 15.76% of the Mosenergo stock cost it 10.9 bln. rubles in 2003.
Alexey Miller’s press secretary Sergey Kupriyanov explained that purchasing the RAO UESR and Mosenergo stocks was not brought up to the attention of the Board of Directors as long as it was “financial investments”. He has confirmed that share purchases and sales must be approved by the board, but the utility assets were not purchased directly by Gazprom. “Gazprom’s subsidiaries are independent legal entities and can make transactions based on their own constituent documents,” Eduard Kucherov, Chief of Department at Baker Tilly Rusaudit, notes. “If Gazprom shareholders want to control its subsidiaries, they need to make respective amendments to their internal documents,” he points out.
Besides, Gazprom’s plans in the utility sector, Gref criticized its excessive independence in preparing for the Rosneft acquisition. Gazprom has announced that the Dresdner Kleinwort Wasserstein investment bank will be the financial advisor for structuring the transaction and the appraiser for Rosneft’s assets and the Gazprom subsidiaries’ shares. Deutsche Bank and Citigroup will give a fairness opinion on the deal. But, according to the minister, appraiser candidacies must be approved by the government which is currently reviewing the options. Kupriyanov responds by saying that Gazprom has hired its own appraiser as one party to the deal, whereas the government can hire a different adviser as the other party.
Stanislav Belkovsky, President of the Istutute for National Strategy, explains the gas monopoly’s behavior by the fact that acquiring Rosneft and consolidating the power industry around Gazprom have been lobbied by Igor Sechin, deputy chief of the President’s staff and chairman of the Rosneft Board of Directors. A source with knowledge of the President’s staff would not comment on the assumption. But, according to the source, the staff are not unanimous about Gazprom’s bold plans. |
