Russian Power chief cuts off army and railway : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

Power chief cuts off army and railway

Ian Traynor in Moscow Friday September 15, 2000

Elite army units are seizing power plants, new-born babies are at risk and trains on the trans-Siberian railways are grinding to a halt as the Russian electricity monopoly gets tough with debtors. Unified Energy Systems, which is owed more than #5bn in unpaid bills, is cutting power to a number of prominent customers, plunging military bases, hospitals and companies into the dark.

The "pay up or switch off" policy is due to Anatoly Chubais, the pugnacious Thatcherite who has run UES for the past two years.

"Chubais is quite serious about his campaign to cut off customers and the government also is slowly accepting the fact that social facilities can be cut off, though it is very sensitive about the military," said Hartmut Jakob, a power sector analyst at Renaissance Capital in Moscow.

That "slow acceptance" let a baby die shortly after birth in a hospital in Vladivostok in the far-east last month when the electricity was cut off.

This week armed soldiers from a base of the elite strategic missile forces in Ivanovo, north of Moscow, seized the local power station to reconnect their barracks.

The prime minister, Mikhail Kasyanov, said the disconnections were inadmissible and ordered UES to keep the military connected. The defence ministry was allocated #32m to pay electricity bills.

Mr Chubais then banned power cuts to the missile forces, but the news did not seem to penetrate Siberia, where a base in Aleix, near the Chinese, border was warned that it would be cut off next week unless it paid #125,000.

A base commander said the troops were removing rocket fuel from the missiles and any power cuts could trigger "an environmental disaster". UES suggested that the army use its back-up diesel generators.

Two nuclear reactors were closed down, one in Sverdlovsk last week and one in Chelyabinsk this week, because of "faults in the regional energy system", though plant managers and the atomic energy ministry denied that Mr Chubais had ordered any power cuts.

"There are two reasons for Chubais's behaviour: he wants to show how important he is and he also badly needs the money because UES has run up enormous debts under his leadership," a Moscow expert on the electricity industry, Moysei Gelman, said.

Gennady Zyuganov, the Communist party leader, said on Wednesday that Mr Chubais should be jailed for his policy.

Throughout the economic collapse of the past 10 years the energy industry has operated on the basis of barter rather than cash. Mr Chubais, who was a chief draughtsman of Russia's flawed privatisation in the early 1990s, before becoming President Boris Yeltsin's chief of staff and election campaign manager, is determined to change that.

Last year UES collected only 30% of its receipts in cash, Mr Jakob said. So far this year cash receipts have risen to 62% of what UES is owed.

The cash-strapped government is the biggest debtor. Central and local government owe 28% of the unpaid #5.6bn. The ministries of defence, interior and justice are the worst offenders.

UES owes at least as much to its creditors, and has posted losses for the past three years, sullying Mr Chubais' reputation as an ardent free marketeer who will deliver profits to UES's shareholders.

"I don't agree with the term cut off," he told the St Petersburg Times last week. "We're not cutting anyone off. We're switching on those who honestly pay for energy, and our policy won't change."

The national railways are said to have made a deal with UES on the backlog of unpaid bills, but yesterday the trans-Siberian route was locked at the key hub of Krasnoyarsk in central Siberia. Power to a 50-mile stretch of the line was cut on Tuesday and Wednesday pending payment of #500,000.

Mr Chubais is keen to publicise military and railway cuts, but less forthcoming about the schools and hospitals.

If the tough tactics continue throughout the winter, the public will suffer.

"Cuts in the social sector are not a large-scale phenomenon, but they're happening now, whereas before the authorities did not allow that to happen," Mr Jakob said. "They're becoming much more widespread.",3604,368518,00.html

-- Martin Thompson (, September 15, 2000


In a different way, these cuts, it would seem, are having the same effects as those tax-uprisings in Western Europe.

-- Billiver (, September 15, 2000.

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