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Unified Energy seeks to require investors to upgrade generators

OAO Unified Energy System, Russia's national power monopoly, will require investors in generating companies to upgrade and expand capacity to meet demand.

„We are preparing agreements with future shareholders that would set out investment obligations,” spokeswoman Tatiana Milyaeva said in a telephone interview yesterday. The utility is selling stakes of as much as 40% in its units to strategic investors and wants to ensure that improvements are made.

OAO Unified Energy System is planning €12,2 billion ($16 billion) of stock offerings in its units this year and next to help fund more than €45.8 billion ($60 billion) of investments in generation capacity. Russian power consumption, fueled by eight consecutive years of economic growth, is forecast to increase 5% a year through 2010, straining the country's aging equipment. The agreements will give Unified Energy the right to block major acquisitions of assets or shares, and may allow the utility control over hiring and firing top managers, Interfax reported yesterday.

Strategic investors will be allowed to sell shares only to buyers who sign a similar agreement, the newswire said. OAO OGK-3, a wholesale power generator in which Italy's Enel SpA has expressed interest, is seeking to raise €1.2 billion ($1.6 billion) in a share sale next month. Enel CEO Fulvio Conti called yesterday for clarification about how the sales will be handled and whether existing shareholders will have a priority right to some stock. (Bloomberg)