As part of president Putin’s reform initiative, the Russian government has passed a number of bills to allow the break up of UES over five years into generating companies that will be privatised, and a national grid network, which will remain under state control. ENEL of Italy was involved in the process at an early stage, when it agreed to start a joint venture with Russia’s ESN, and it now manages Kolenergo, in the Murmansk region, under contract with UES.

ENEL said that its experience with Italy’s energy sector liberalisation makes it well suited to play a role in the reform of UES. ENEL plans to tender for one of the 10 wholesale generating companies that currently make up UES. Four of the generating companies will incorporate hydroelectric stations, and the remaining six will be based around thermal power plants. ENEL hopes to win a management contract for one of the thermal generating companies.