Gazprom to purchase four energy sales companies at RAO UES of Russia

Updated April 1, 2008

   OAO Gazprom wants to purchase at least four energy sales companies at RAO UES of Russia. The purchase of only one JSC Mosenergosbyt can make JSC Mezhregionenergosbyt, controlled by the monopoly, the largest in the country. On the whole, Gazprom occupies more than 25% of the Russian energy sales market in terms of plans realization.

   The corporate "Gazprom" magazine has quoted JSC Mezhregionenergosbyt head (Mezhregiongaz JSC subsidiary) Denis Fedorov, who has told about the plans to purchase the energy sales companies at RAO UES, as saying that they have been interested in four "sales" planned to tender in the second quarter of the current year, but the final decision would depend on their price. Mr. Fedorov did not specify what companies exactly JSC Mezhregionenergosbyt was concerned with. In Mezhregiongaz reported that it went about the companies operating in "areas, where we already have OGC and TGC".

   Gazprom owns Mosenergo controlling stock interest. The monopoly also receives control in OGC-2 and OGC-6 after reorganization of RAO UES. Moreover, Gazprom becomes the owner of more than 46% stocks in TGC-1 in the nearest future. The monopoly has already declared about the concerns with the purchase of TGC-7 stocks. If the transaction about joint venture establishment by Gazprom coupled with OJSC Siberian Coal Energy Company (SUEK) takes place, the monopoly will receive stakes in TGC-12 and TGC-13.

   Last year JSC Mezhregionenergosbyt sold 12 billion kWh of electric power to Gazprom enterprises. This year the company concluded supply contracts for 24 billion kWh of electric power. It was planned that Siburenergomanagement (SIBUR Holding JSC sale company) would amalgamate with Mezhregionenergosbyt. However, SIBUR source was quoted as saying that the final decision concerning this matter was not taken yet. If the transaction takes place, the sales of Gazprom Sale Company will grow up to 30 billion kWh.

   The branch experts assume that Gazprom will be foremost concerned with "sales" in Moscow, St. Petersburg, Saratov, Samara and Ulyanovsk. Their sale is planned for the second quarter of this year. Alpha Bank analyst Alexander Kornilov estimates JSC Mosenergosbyt at $780 million, the Petersburg company - at $67 million, the Samara company - at $114 million, the Saratov Company - at $44 million, the Ulyanovsk company - at $8 million. "Gazprom interest in the "sales" is clear", says Bank of Moscow analyst Dmitry Skvortsov. "It supplies gas to all OGCs and TGCs, including its own, and it is quite logic that the monopoly controls the energy sale".

   Dmitry Skvortsov marks that JSC Mosenergosbyt purchase will increase the sales of Gazprom sale company more than triple. Alexander Kornilov adds that if Mezhregionenergosbyt purchases all "sales" listed above, its stake at the Russian sale market will be 25%. Mosenergosbyt, Ulyanovskenergo, Saratovenergo and Samaraenergo auctions are set for April. Gazprom can also purchase "sales", which RAO UES could not sell last year, and now they are put up for sale in the electronic Istra system. The "sales" comprise the Kola energy sales company, Bryansk sales company, Komi energy sales company, "Energosbyt of Rostovenergo", Oryol sales company, Stavropolenergosbyt and Kostroma sales company.