In This Issue: Russian Electric Utility Reform: Generating Energy-And Risk
Will the transition from a state-owned, marginally profitable industry to a competitive, private sector-based one go smoothly? Probably not. Nowhere else has power restructuring followed the script. Will Russia learn from other countries' experiences in the past 17 years? Probably so.The Credit Effects Of Revamping Russia's Electric Power Industry:
Growing concerns about Russia's sputtering electricity highlighted huge investment needs, gave
impetus to sector reform, and led to a major revision of state-owned utility Unified Energy System's investment plans. Privatization of generating units and price deregulation thus became more palatable for politicians. Deregulating Russia's Wholesale Electricity Market Could Create Profits-And Problems:
In a deregulated Russian wholesale energy market, higher profitability should support generators' credit quality. Regulatory risk will decrease after the state imposes market rules and introduces long-term gas supply agreements plus transitional long-term power contracts. But political risk should not be neglected. Will European Utilities' Investments In Russian Power Pay Off?:
The liberalization of Russia's wholesale power could allow investing European companies to transfer their expertise of deregulated markets and so leverage their returns by efficiency enhancements. Yet, investors face risks of a developing sovereign environment, and an uncertain political and regulatory climate. A Power Surge For Nuclear Energy In Russia:
After years of neglect, the state plans a big expansion-from uranium mining to nuclear plant construction-to boost Russia's chances of cashing in on the global renaissance in nuclear energy. Investing in new generation will also help meet growing power demand after it deregulates the rest of its electricity sector. Corporate Governance In Russia Evolves As Power Deregulation Unfolds:
The level of corporate governance in Russia remains below world standards, especially for utilities affected by the vagaries of energy sector reform. Standard & Poor's Governance Services expects that privatization of energy assets, if successful, will improve governance as well as operating efficiencies and investments. Electricity Reforms In Russia: Lessons From The Dominican Republic:
Given our concerns about political risk and the restructuring of the electricity sector in Russia, an account of developments in the Dominican Republic following the restructuring of its own electricity offers some perspective on the Russian case. About CreditWeek:
CreditWeek highlights activity in the global credit markets, providing financial professionals with objective insight and extensive analysis in the global credit markets. Providing breaking news articles, industry analyses, market commentaries, and ratings trends, CreditWeek brings you the credit expertise and analytical rigor of Standard & Poor's worldwide team of analysts through this weekly publication
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