Russia appoints Sechin ally to manage hydro giant

Mon Nov 23, 2009 3:12pm GMT

Quotes

   

* Yevgeny Dod appointed CEO of RusHydro

* Analysts say Dod has strong government links

* Joins from electricity trader Inter RAO

* RusHydro plans dam overhaul, additional share issue

* RusHydro shares rise 5 pct, outperform market

By Robin Paxton

MOSCOW, Nov 23 (Reuters) - State-run hydro power group RusHydro (HYDR.MM) on Monday named a close ally of Russia's energy tsar to overhaul ageing infrastructure and lead a share issue to help fund $1 billion-plus in repairs to a Siberian dam. The appointment of Yevgeny Dod, who ran electricity trader Inter RAO (IRAO.MM) for nearly a decade, signals a reshuffle within the Russian power sector that analysts say tightens the grip of powerful Deputy Prime Minister Igor Sechin.

Dod, 36, will run the world's second-largest hydroelectric power producer as it prepares to raise up to 19 billion roubles ($659 million) in an additional share issue next year. He worked with Sechin at Inter RAO, where Sechin is chairman of the board.

"Dod is a young and dynamic manager with plenty of experience in the energy sector, and he comes with the support of the government," said Alexander Kotikov, senior utilities analyst at Troika Dialog.

RusHydro, the world's second-largest hydro power generator after Hydro Quebec, has drawn government scorn since an accident killed 75 workers in August at the Sayano-Shushenskaya dam, the single biggest hydroelectric power station in Russia.

The disaster, which occurred when a turbine room flooded, prompted Prime Minister Vladimir Putin to call for a sweeping overhaul of Russia's creaking infrastructure, little of which has been upgraded since Soviet times.

Sechin, Putin's powerful deputy and Russia's foremost energy official, accused current and former managers at the dam of using "fraudulent schemes" to win work contracts. [ID:nLH17306]

Dod had been chief executive of Inter RAO since 2000.

"If he is appointed, he would not have been recommended for this position without the agreement of Igor Ivanovich," Kotikov said, referring to Sechin by name and patronymic.

MEDVEDEV'S ASSISTANT

Dod replaces Vasily Zubakin, who had been acting RusHydro chief executive since the departure last year of Vyacheslav Sinyugin, now deputy energy minister. Zubakin will stay at RusHydro as a management board member.

Dod's will be succeeded at Inter RAO by Boris Kovalchuk, who worked as an assistant to Dmitry Medvedev before the current Russian president took office, Kommersant business daily reported.

Kovalchuk is an existing board member at Inter RAO and son of banking magnate Yuri Kovalchuk.

RusHydro shares rose 5.3 percent by 1432 GMT, outperforming a 1.7 percent rise on the MICEX index .

While most analysts said Dod's appointment would be viewed positively by investors, they said sweeping changes in the firm's strategy were unlikely.

"The main signals for the market are the pricing of the new 19 billion rouble share issue and the strategy for financing the reconstruction of Sayano-Shushenskaya," UniCredit Securities equity analyst Dmytro Konovalov wrote in a research note.

Energy Minister Sergei Shmatko said on Nov. 18 that the state would not participate in the RusHydro share issue, though it would retain control of the company after the transaction.

Repairs to Sayano-Shushenskaya have been estimated in the region of 40 billion roubles ($1.39 billion), though Shmatko has said they could cost less than this. [ID:nLI102944]

RusHydro is also undertaking new projects to expand Russia's hydroelectric power capacity. These include construction of a major new dam, Boguchany, in partnership with aluminium giant UC RUSAL. Shmatko said this project would cost 34 billion roubles. (Additional reporting by Anastasia Lyrchikova; Editing by David Cowell) ($1=28.85 Rouble) (robin.paxton@reuters.com; +7 495 775 1242; Reuters Messaging: robin.paxton.reuters.com@reuters.net))

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