Federal Grid Jumps 1st Day in 3 on Putin Decision: Moscow Mover

Federal Grid Co. surged for the first day in three as President Vladimir Putin decided against a proposed merger of the monopoly for high-voltage power transmission with OAO MRSK Holding, a power distributor.

Federal Grid jumped 1.7 percent to 23.348 kopeks by the close in Moscow. MRSK Holding slumped 4.1 percent to 1.982 rubles.

Putin approved creating a management company for the country’s power grids, rejecting a proposed merger, Energy Minister Alexander Novak told reporters yesterday after a government meeting.

“The news is positive primarily for Federal Grid Company, whose margins would substantially worsen following a merger with less profitable MRSKs,” Alfa Bank analysts, led by Alexander Kornilov, said in an e-mailed report. “The latter would also bring a lot of problems to Federal Grid shareholders, including high grid losses, poor payment discipline,”

Putin also supported pilot sales of state stakes in one or two regional grids after distribution fees are revised, Novak said. The president said earlier at the meeting that industry management must change and minority shareholder interests must be respected.

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