Gazprom mulls float of units

City A.M. Reporter
RUSSIAN energy company Gazprom said yesterday it planned to combine its numerous electricity holdings under a single entity that it would float on the stock market.

Combining the assets, some of them large electricity providers, would create Russia’s second-biggest power producer after state-controlled Rushydro, Renaissance Capital analyst Vladimir Sklyar said.

The consolidation would be done under GazpromEnergoHolding, Gazprom’s power division, the group said yesterday during an investor presentation on its strategy for the electricity assets.

Through its four power-generating companies, Gazprom produces 17 per cent of all the electricity in Russia, and it plans to boost their combined generating capacity by 8.8 gigawatts by 2020 at a cost of 365.5bn roubles (£8.6bn).

“A united Gazprom could generate synergies -– it would have greater negotiating power over fuel suppliers, reduce administrative costs and could overlook a combined capital expenditure programme,” RenCap’s Sklyar said.

After Russia’s recent sweeping reforms of the power sector, Gazprom emerged as majority owner of Moscow-based power company Mosenergo and regional power firm TGK-1, which serves St Petersburg, Russia's second-largest city, and the surrounding region.

RenCap’s Sklyar said an inital public offering (IPO) of the combined shareholdings could be attractive to private investors keen to take advantage of the liberalised wholesale gas market and Mosnergo’s new capacity.

“Funds from the IPO would be needed to fill financial holes in the balance sheets,” Sklyar said.