5.4.6. Anti-crisis management

In 2001 a considerable amount of work was done to ensure a stable functioning of energy companies in problem regions. A thorough analysis of their performance was made during the autumn-winter periods of 2000/2001, and the main causes of the crisis situation in one of the most problematic regions - the Primorsky kray were identified and analysed. They were:

• the erroneous policy adopted by the former regional administration with respect to tariffs and payments for electricity;
• unsatisfactory financial conditions of the energy companies resulting from non-payments by consumers, leading to a failure to create the necessary fuel reserves and carry out the necessary repair work;
• a collapse of the regional energy sector and, as a consequence, a substantive increase in power consumption (by 14% in January 2001 at peak consumption hours) in the conditions of fuel shortages and a strained balance between power consumption and generation.

The crisis situation with the supply of power demanded of RAO "UES of Russia" to institute a direct control over some regional energy systems and to create the Anti-Crisis Headquarters (ACH) in order to overcome the crisis within the shortest time possible and to stabilise the supply of power.

The ACH took drastic measures aimed at keeping the fuel supply and energy production in balance, the fuel and finance in balance as well as fulfilling the main items of the budgets of energy companies not only in the Primorsky kray but also in other problem regions. The main instruments of the ACH's work were the quarterly production and finance programmes (PFP). The daily schedules of fuel supply and repair works were prepared on their basis.

The energy companies of the problem regions were aided in obtaining the financial resources required for the fulfilment of PFPs. A part of such resources was provided directly by RAO "UES of Russia".

RAO "UES of Russia" motivated decisions by federal and local authorities envisaging a timely provision of funds from various sources for the creation of fuel reserves by the energy companies.

A Special Commission of RAO "UES of Russia" considered the issues related to financial settlements with power consumers, with fuel suppliers, settlements on the FOREM, payments to the budgets of all levels, monitored salary payments and reduction of salary arrears. The work of the Special Commission allowed RAO "UES of Russia" to improve and stabilise the production and financial performance of a large number of energy companies.

The main result of the year 2001 was the stabilisation of the work of energy companies in the problem regions. It became possible due to the development and implementation of the following measures:

• strict compliance with the provisions of PFPs, achievement of revenue targets set forth in the budget and improvement of the budget's execution on the part of the treasury, i.e. through ensuring payments for current electricity consumption and reduction of the volume of debts owed by consumers;
• organisation of efficient work with federal authorities, regional administrations and local governments to make them allocate in the municipal budgets, as a separate item, the funds required to effect payments for electrical and thermal energy and for ensuring a 100% payment for current consumption;
• measures intended to establish economically justified tariffs, allowing the energy companies to make profits at a rate of not less than 10 - 15%;
• strengthening control over the fulfilment of the production cost management programmes;
• work with managers of energy companies aimed at improving the quality of production and financial activities of these companies and the efficiency of their executive personnel;
• ensuring a stable fuel supply and maintaining fuel reserves at a prescribed level through settling financial matters with suppliers;
• preparation of power equipment for operation.

In order to ensure a stable supply of electricity to consumers in the autumn-winter period of 2001/2002 considerable efforts were made to build winter reserves of fuel at power stations. Beginning with the second quarter of 2001, after the introduction of a new methodology for the assessment of the required fuel reserves for each energy company, the reserve building process was monitored on a weekly basis. RAO "UES of Russia", together with the Ministry of Energy of Russia and the Railway Ministry, developed and signed schedules for coal purchases and deliveries in the second - fourth quarters of 2001 and exercised supervision over their fulfilment. Beginning with the second quarter of 2001, RAO "UES of Russia", together with OAO Gazprom, approved the gas supply volumes for each power station of a federal importance. Due to the measures taken during the last five years, the targets for fuel reserves at power stations have been reached.