The Merger of Gazprom and RAO UES and the New Gas and Electricity Pricing Patterns

Power industry reform is drawing towards completion. Despite the initial plans of its authors, we see that what’s coming is not as much reformation of the competitive market but rather emergence of a new gas&electricity giant that packs the strength of the gas monopoly and the vital importance of electrical power. Gazprom is already aggressively acquiring power generating units, following Aleksey Miller’s declared strategy to turn the gas company into a major energy corporation.

The main producer of energy feedstock is beginning to take over power producers and thus reshaping the fuel & energy industry of Russia. For Gazprom, this means new opportunities , for energy consumers – new risks. In the conditions of gas shortages in the domestic market Gazprom intends to pull off further reduction of gas consumption. During election wars and consequent political instability, the need to solve structure-related problems pales into insignificance and making competition for the country’s most important assets the only priority.

The new study by the National Energy Security Fund analyzes 
Gazprom’s expansion in the power segment:

• Gazprom’s energy strategy

  • «The quest for assets»
  • Fighting for control of power business inside Gazprom

• The problem of fuel supplies to power stations

  • Power units placement program
  • Long-term contracts
  • New pricing pattern
  • Risks for the economy of Russia

• Acquisition of RAO UES’s assets

  • Gazprom’s financial difficulties
  • The patterns of cooperation with foreign companies
  • Gazprom’s struggle with other contenders for power generating units
  • Problems associated with the plans to take over SUEK

• Forecast of further developments

  • The outlook on vertical monopolization of the power industry
  • The new gas and electricity pricing patterns

The content of the report: