Power industry reform

Power Industry Reform Background

In the 1980s electric power industry of the country started showing signs of stagnation: generation capacities were renewed slower than electric power consumption increased.

In the 1990s, when the economic crisis in Russia broke out, the volume of electric power consumption substantially reduced, and update of capacities practically stopped.

The whole situation in the power sector was characterized by the following:

• As far as technological indicators are concerned (i.e. fuel rate, average efficiency of equipment, operating power of stations etc.) Russian power companies were falling behind their analogues in developed countries;
• There were no stimuli to increase efficiency, encourage energy saving, and plan power generation and consumption more rationally;
• In separate regions regular power interruptions took place. The country faced a global energy crisis, and probability of major power failures increased;
• There was no pay discipline, and non-payments were widespread;
• Power sector enterprises didn't provide financial and information transparency;
• Access to the market was closed for new independent market players;

All this led to the necessity to restructure electric energy sector, creating stimuli to increase efficiency of power companies and providing opportunities for attracting more investments to the sector. Otherwise, under further expansion of external economic cooperation, Russian enterprises could lose economic competition not only in foreign markets, but also at home.

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