A Strategic Case with Far-Reaching Implications
Criminal investigations into the leadership of TGC-14 — one of the largest territorial generating companies in Eastern Russia — could mark the beginning of more than just the nationalization of its assets, considered strategic for Buryatia and the Transbaikal region. They may also open the door to a broader reconsideration of the results of Russia’s energy privatization, conducted between 1998 and 2008 under the leadership of Anatoly Chubais and Alexander Voloshin during the breakup of RAO UES.
Such a development has become possible due to the weakening of Chubais’s political standing and a final, high-level consensus among Russian authorities to critically reassess his legacy throughout the post-Soviet era.
The Need for Reform Amid Budgetary Strain and Systemic Inefficiency
This reassessment is driven by the growing burden on the federal budget and the urgency of transitioning to a high-efficiency economy based on informational and centralized planning principles. The dismemberment of RAO UES into 26 “independent” entities — with around 30% of them owned by foreign residents — took place without the foundation of a competitive market for electricity distribution and sales. The absence of a unified state investment strategy for modernization, and the lack of a coordinated policy to address consumer debt, have contributed to the degradation of Russia’s energy sector.
Corruption Embedded in the System
According to law enforcement data, approximately 15% of corruption-related violations occur in the energy sector. The cost per kilowatt-hour often includes expenses for non-core activities, inflated “administrative costs” (i.e., bribes), losses, and material damages. As a result, despite electricity surpluses, household tariffs continue to rise faster than inflation — even with cross-subsidization in place. The Federal Antimonopoly Service (FAS) lacks both the regulatory power and enforcement tools necessary to counteract the systemic nature of cartel agreements designed to keep rates high.
A Trillion-Dollar Loss
RAO UES’s revenue in 2006 was approximately $40 billion (900 billion rubles), suggesting that its total asset valuation at the time was around $300 billion. The privatization process overseen by Chubais brought in just $25 billion in one-time revenue for the state. However, had the energy sector remained under government ownership, estimated cumulative revenue for the national budget over the past two decades — even with a conservative profitability rate of 20% (compared to the actual 30–35%) — would have amounted to about $1.2 trillion. That’s equivalent to nearly 50% of Russia’s projected GDP for 2024.
A Legacy of Fraud and Asset Stripping
From the outset, the modernization programs presented by private energy firms were largely unrealistic. On one hand, they misled the state; on the other, they enabled aggressive asset stripping for the benefit of shareholders. According to criminal case materials from the TGC-14 investigation and numerous other prosecutions, much of these funds were transferred abroad through various channels by new owners — including non-residents of Russia. Among those implicated are known associates and subordinates of Chubais and Viktor Vekselberg, such as Weinzierl, Olkhovik, and Rapoport.
At the same time, the state itself contributed to a climate of corruption by imposing informal expectations on energy companies — such as turning a blind eye to unpaid bills from impoverished citizens, vulnerable social groups, and strategically important enterprises. This “corruption margin” inflated energy tariffs and contributed to procurement violations and market distortions.
