Word: mosenergo
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Dates: during 1997-1997
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...bitter cold and darkness of a Russian winter, Muscovites depend on Mosenergo, the capital's principal supplier of heat and electricity, to survive. It's a relationship that has also weathered virtually every kind of political storm during the 20th century, and even earlier. "We provided warmth and light under 'our little father the Czar,' and when 'our people' [the communists] came in," says Sergei Rumyantsev, Mosenergo's deputy director general. "Now we do it under the democrats, because they need us as well. We have nothing to do with politics...
Known as the Electrical Illumination Co. when it was established in 1887, Mosenergo is ensconced on the banks of the Moscow River across from Red Square and the Kremlin. It has already made history as the first Russian-registered company to sell securities in the U.S. in the post-communist era. In 1995 Mosenergo issued $22.5 million worth of American Depositary Receipts, or ADRs, in a private placement on Wall Street handled by Salomon Brothers. Two years before the U.S. offering, and after 70 years of exclusive state control, Mosenergo officially gained the status of a public company in Russia...
...business and political conditions in Russia have improved, the company has flourished as a flagship of the new Russian capitalism. Mosenergo stock has shown a steady advance this year; last year's net profit was $548 million, an increase of $19 million. The company's value is still intimately tied to its quasi monopoly of energy production and distribution across the country. Not only is Mosenergo the only electricity supplier to more than 16 million people in the Moscow region, but it furnishes more than 80% of their heat as well. The company owns 21 electric power stations, with...
...company still faces many challenges. The most formidable: nonpayment of utility bills by its electricity customers, a cash-flow challenge that Rumyantsev calls "a 24-hour-a-day headache." Yet Mosenergo is not alone in this agony: being stiffed by customers is common for Russian utilities and other businesses in the brash new age of no-holds-barred capitalism. If anything, the company may be less plagued than others, since its center of operations is in Moscow, where business is booming and power consumers are presumably more flush...
Another potential pain for Mosenergo shareholders was narrowly avoided last spring. Boris Nemtsov, Russia's reformist First Deputy Premier, personally intervened to block a planned limitation of shareholders' voting rights as well as a new stock issue that would have substantially diluted the holdings of foreign investors. Infringement of the rights of minority shareholders has been a recurrent problem in Russia, and one that President Boris Yeltsin's free market-oriented government continues to battle...