NationStates Jolt Archive

LINK (http://www.nytimes.com/2008/04/09/business/worldbusiness/09electric.html)

MOSCOW — A plan to privatize the world’s largest electricity company is entering the home stretch, successfully it seems, in spite of its complexity and the general hostility toward privatization in today’s Russia.

The plan’s architects say they have raised $33.9 billion by creating a simple and obvious investment opportunity: the chance to sell heat and light to one of the world’s coldest and darkest countries. Moreover, the Russians say they have learned how to privatize their electricity market by watching the best example of failure: the Americans and Enron.

What do ya'll think about this. Will it work? Is this a good idea?

Personally, I think that the energy market in Russia will explode if the government goes through with this. They've already got new companies springing up and over 30 billion dollars of investments. I think Russia will have a lot of new state-of-the-art power plants soon and I think the price of energy will fall as the technology gets better and the market becomes more competitive.

wait, wait, I know ya'll have some strong opinions about this but lets not have everybody talk all at once.

Although they try to portray themselves as different, the current Russian regime are no different than the thieving corrupt oligarchs of the 90's, selling off the people's resources to line their own pockets.

Although they try to portray themselves as different, the current Russian regime are no different than the thieving corrupt oligarchs of the 90's, selling off the people's resources to line their own pockets.

Alright, you've got some explaining to do. If the Russian government was trying to make more money, why wouldn't they just keep the energy market as a government monopoly?

Although they try to portray themselves as different, the current Russian regime are no different than the thieving corrupt oligarchs of the 90's, selling off the people's resources to line their own pockets.

Wait, wait, wait.

Where the fuck has your "Putin is a hero, rebuilding socialism" crap gone?

Privatization would be a wonderful thing, were it legitimate. In a nation with government transparency and some semblance of accountability with a viable opposition party, this would be a good thing. In Putin's Russia, this is nothing more than giving state assets to cronies.

The lesson to be learned from the US is not to let politicians attempt to micromanage market forces for momentary political gain. So, learning from that mistake, they are probably just going to make sure no one can get in the way of direct payouts to various Friends of Putin.

When i first heard about this, i was avidly for it, as in Russia, any step away from Putins monopolizing of everything is a good step, but ...

Privatization would be a wonderful thing, were it legitimate. In a nation with government transparency and some semblance of accountability with a viable opposition party, this would be a good thing. In Putin's Russia, this is nothing more than giving state assets to cronies.

This statement made me much more apathetic towards the whole situation, as it is unfortunately very true.

Anyone who believes this will get exactly what they deserve. Russia doesn't do privatisation, it does corporatisation. Rather than forming truly public companies, where anyone who can afford it can buy shares and even control of the assets, what you get here is shares being allocated to insiders. Miraculously the various entities that spring from this will be directed by former (or current) board members of firms like Rosneft and Gasprom. What you will not see is foreigners owning controlling stakes, or indeed people who the Kremlin isn't a fan of.

The article mentions Mikhail D. Prokhorov. He happens to be pretty much the only oligarch I know of who actually knows something about business rather than politics. But he's an exception. As the article also states, vital parts of the market won't be liberalised. So in effect the profitability of these firms will depend on the rules the Kremlin sets.

Oh, and Gasprom's pricing structure, of course. But then, that firm and the Kremlin are basically one and the same thing.

snip

Alright, but it is still a better alternative to a state company, no?

the russian economy is growing with 8% per year, after Putin, Russia became a superpower, they have repaid their nearly 200 billion debt (~184 billion), while the american raised to 3 trillion!!! technically Russia controlls Europe's energy market, what makes them enormous profits, their corporations buy everything there, but they do it through old KGB cover-corporations (Swizerland - Russia, Cyprus - Ukraine lol), so they cant be tracked, but they are hereand stronger than ever.
dollar's inflation is higher than ever, oil price is skyrocketing (116$/barrel), while russina shares are also skyrocketing. for example, Moscowskaya's (so the county where Moscow is) GDP has raised to USA's average GDP (what is very unequal, but shows fast advance), so u can say that Putin and his "regime", what is elected mostly legally (minimal wage raised, taxes down to 13%), but he made a miracle...

It's not Putin and his boys who are doing a miracle...it's just the oil, natural gas and iron-copper prices who are all skyrocketing...

Fortunatly for Russia, this land own plenty of all.

About the pool: I'm against privatizing strategicaly important compagnies who have to fulfill a public service, in every country in wich the electrical market is totaly privatized, it became an utterly failure ( UK, USA, Argentine... )

About the pool: I'm against privatizing strategicaly important compagnies who have to fulfill a public service, in every country in wich the electrical market is totaly privatized, it became an utterly failure ( UK, USA, Argentine... )
Well, I wouldn't go so far as to describe the British electricity market as a failure, evn if it does have quite a few shortcomings - especially with regards to fuel poverty and the uselessness of the regional distribution companies. EDF sucks eggs. I'd much rather see the distribution grid nationalised and run in cooperation with the electricity companies, who would remain privatised.

I don't understand the meaning of the expression " suck eggs " could you help me ?
It is positive or negative ?

By the way, EDF, the French main electrical compagny, is a private one, today the government owns less than 10% of the capital of EDF.
But on the other hand, it's the government who decide the selling price of electricity of this company and keep them the obligation to give a full power grid on the whole country, it's fine for me.

PS: and EDF is making colossal profits every years even with this fixed prices.

Alright, you've got some explaining to do. If the Russian government was trying to make more money, why wouldn't they just keep the energy market as a government monopoly?

Because this privatisation is built for the exclusive benefit of the Putin-aligned oligarchy. Any oligarch who tries to go on his own ends in Siberia iirc.

It's not "the Russian government", it's "Putin's ring".

Alright, but it is still a better alternative to a state company, no?
That depends. A state company exists to feed money and power to the government idiots in charge. A state-capitalism company exists to feed money and power to the private idiots with government ties who are in charge. Neither have to do anything particularly well to earn this money and power, since it's funnelled to them by law.

Gasprom is an objectively bad company. So is Rosneft. They're badly run, they can't keep their infrastructure intact and all the talk about "controlling Europe's energy" presumes they can actually produce enough to satisfy European consumers, which is doubtful at best.

But they're both making colossal profits, namely because they don't have any competition to worry about. The Kremlin routinely shuts down foreign-initiated operations after the investment is made, and where that's not enough a competitor is called in on tax fraud, broken up and sold off to them.

Do the Russian (or European, for that matter) consumers benefit? Not a bit.

By the way, EDF, the French main electrical compagny, is a private one, today the government owns less than 10% of the capital of EDF.
Private ownership =/= free market.

PS: and EDF is making colossal profits every years even with this fixed prices.
I'd be rather happier if they didn't. At least then we could say that it wasn't the French electricity user who was paying for the grandes écoles alumni club.

Judging from the fact that they are auctioning off the company to those who probably have enriched themselves from the state, as opposed to the taxpayers who have financed this company, this is merely a sleight of hand of transferring power from one particular interest to another that will support the state. They will most likely provide plenty of regulations, subsidies, etc. that will insulate this company from free-market competition and simply enrich them at the expense of others who are barred from legal entry into the field of electricity.

Sad that their using us as an example. Just goes to show how much we've regressed. Or, if you're a communist, progressed. I vote the former!

...Who cares what Russia Does... But, Honestly, it has a shot, afterall, the United States has Electricity and Heat available for just about everyone, even poverty stricken people for the most part...

Wait, wait, wait.

Where the fuck has your "Putin is a hero, rebuilding socialism" crap gone?

He realized that Putin thinks the title of 'Tsar' sounds better than 'Comrade'.

In Putin's Russia, electricity privatizes you!

Andarassss, you've got some 'splaining to do! (http://www.dga.org/news/v28_2/images/features_july03/lucy_1-full.jpg)

Chrissakes. This was such an unspiffing idea in the UK, and hasn't done anything good anywhere.

Sounds like a great idea if they do it right but there are so many different ways they can screw it up that this certainly won't end well.

To mention one danger they could create local monopolies by letting the company that own the power lines to people's homes forbid people from buying electricity from other power companies. A free electricity market only exists if you can buy electricity from any power plant regardless of who owns the power line to your house.