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#7 - JRL 7026
January 20, 2003
Voloshin heeds Illarionov's advice
By Andrei Litvinov

The constant criticism of the head of the all-Russian energy grid RAO UES, Anatoly Chubais, by the president's economic advisor Andrei Illarionov has eventually paid off. The head of the presidential administration Aleksander Voloshin admitted on Monday that Illarionovs stand had played a role when the draft law on energy sector reform was once again amended.

Formally, the discussion of a package of bills dealing with energy sector reform in the State Duma is scheduled for January 22. However, unanimous opinion is that the Duma will not stick to that schedule. First of all, the Duma council must consider the governments amendments to the bills. The government intended to correct the part that says that energy tariffs can only be changed once a year and only after Duma approval, which was already approved by the parliament in December. The governments amendments stipulate that control over tariffs remains an executive power until 2008.

It had been expected that the discussion of these suggestions would take place at the sitting of the Duma Council on Tuesday, January 21, but on Saturday Prime Minister Kasyanov held a meeting with the leaders of the centrist parliamentary factions and coordinated with them some serious changes in the bills that should make them acceptable for the Duma. On Monday, the head of the Dumas centrist coordination committee Vladimir Pekhtin announced that the amendments could be submitted to the Duma before the end of the week. The principal change is the exclusion of the date July 1, 2005 from the bills the precise date at which electrical energy must start being traded on the open market. The centrists want the government to determine that date in accordance with the readiness of the economy and the population.

If this amendment is passed, one of the energy reforms primary objectives an open energy market attractive for foreign investors is shifted somewhere further into the future.

As far as the governments other amendments are concerned, in a Monday interview with Reuters, a source in the Ministry of Economic Development set the date of a possible discussion on these amendments in the Duma at early February.

The leadership of RAO UES, however, has told Gazeta.Ru that they see nothing dramatic in the latest events, as the amendments do not touch upon the essence of the reforms. Our sources in the power monopoly still maintain that the bills could be approved in February. Prime Minister Kasyanov has voiced the same position in his recent public addresses. But we have at least two reasons to doubt that the State Duma will hold the second reading on energy reform bills next month.

The first reason is that after the New Year holidays vice chairman of the lower chamber Lyubov Sliska outlined February as possible time for the bills discussion in the Duma. However, when this was announced, it was considered that the amendments would be ready before January 21, but after the centrists submitted their suggestions, the deputies now have a lot of more work to do.

The second reason and more importantly is that on Monday the head of the presidential administration and RAO UESs chairman of the board Aleksander Voloshin, in an interview with the Ekho Moskvy radio station drew attention to the criticism of the reform from Putins own economic advisor Andrei Illarionov. Voloshin stressed that the latest modification of the bills emerged from a public discussion, initiated first of all by Illarionov and said that the advisors point of view on the methods for reforming the energy sector ''had brought certain benefits''.

It should be noted that Illarionov is not simply a critic; he is the principal opponent of the existing concept of reforming the energy sector and of RAO UES management.

Until recently, Kremlin officials preferred not to notice Illarionovs controversial stance towards Anatoly Chubais - the mastermind behind the reforms plan, but now Voloshin has conceded that the advisors opinion is being taken into consideration.

In such a situation, it is quite obvious that further corrections will be made to the documents and it could take more than a month to do so. On the other hand, in the same interview Voloshin said that the Kremlin is not yet planning any drastic moves in RAO UESs personnel. ''RAO is a managed with difficulties, but it is run by good managers at the moment,'' he said.

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