|
From 1994 to 1998, Sovereign focused primarily on the Russian electricity sector. There had been a long term shortage of investment and infrastructure had become antiquated. Generation capacities were being renewed slower than electric power consumption increased. Sub-station failures in Siberia were commonplace and the need for capital to replace equipment had reached a dire point.
UES, A Sleeping Giant
In 1994, Sovereign acquired over 4% of Unified Energy Systems ('UES'), the state-controlled holding company for the power sector. The giant Russian power utility held varying ownership stakes in a large number of regional generation and distribution companies, as well as the national grid operator. With total generating capacity of over 100,000 MW, it was one of the world's largest electricity companies.
The company is the largest electricity company in Russia, generating 69% of general electricity output and 32% of general heat production in the country. Owning 96% of the high voltage grids and 77% of the distribution network in Russia, it employs 577,000 people.
Mosenergo, Power in the Capital
Sovereign also acquired 11% of Mosenergo, the Moscow-focused power utility, comprising both generation and distribution assets. Mosenergo was the financially strongest power utility in Russia, with revenues exceeding USD 3 billion.
With 15,000 MW of installed generation capacity, representing 6% of Russia's total heat and 8% of Russia's total electricity supply, the company today provides light and heat to the homes of 15 million citizens in the Moscow region.
Irkutskenergo, Powering the Regions
During this period, Sovereign also accumulated a 10% shareholding of the Siberian hydroelectric utility Irkutskenergo, strategically situated on the shores of Lake Baikal, the world's largest freshwater lake. |
 |
Background
Unified Energy System of Russia was established on 15 August 1992 as an electric energy holding company. Most of the state-owned electric energy assets, such as thermal and hydroelectric power plants, transmission lines as well as state-owned shares in power companies, research and engineering companies and construction entities of the industry were transferred to RAO UES, with exception of assets related to the nuclear energy. In total, RAO UES owned more than 70 energy companies and more than 40 power plants with federal level importance.
In 2006, the reorganization of RAO UES started. The first stage of the reorganization, during which generating companies WGC-5 and TGC-5 were spun off from RAO UES, was completed on 3 September 2007. At the second stage, all other subsidiaries of RAO UES were spun off. It was seen as a massive privatization of power industry with the goal of attaining about US$79 billion in investment. As a result, on 1 July 2008 RAO UES completed the corporate reorganization and ceased to exist after its merger with and into UES FGC, a Federal Grid Company. All together, six wholesale generation companies (WGC), 14 territorial generation companies (TGC), RusHydro, FGC UES (Federal Grid Company), SO-CDA (System Operator), IDC Holding, RAO ES of the East, and Inter RAO UES continue as independent entities.
|