Page 43 - bne_November 2018_20181105

bne November 2018 Eastern Europe I 43
1995 and left the Soviet system. After years of debate the three Baltic states are now moving slowly towards a “BREL- Lxit” and there is a plan for the Baltics
to also make the switch to the European system by 2025.
The future of BRELLxit remains unclear as it comes down to a question of who will pay the $1bn bill. The first stage will be to connect Poland's grid to comple- ment the one existing Lithuania-Poland electricity interconnector, the 500
MW LitPol Link.
As the other two Baltic states have already managed to greatly improve their energy security they have become a lot more sensitive to the cost of the BRELLxit, Estonian Minister of Econom- ic Affairs and Infrastructure Kadri Sim- son has said that delinking the Baltics
from BRELL will be so expensive he has questioned the economic viability of the plan. However, on the general principle of reducing the EU’s exposure to possible Russian energy aggression, the EU as a whole still supports the idea. Currently it seems that the EU appears willing to foot much of the bill for delinking.
And delinking could bring some energy savings in the long-term, but not the short- term. Experts say consumers in Latvia and Lithuania could eventually enjoy price reductions of 5-7% in power tariffs, but in the short-term utilities would almost certainly pass the cost of delinking on
to customers, which means the cost of power would have to go up at first.
That has to be set against the economics of the fact that power imports from Belarus are likely to reduce energy costs even more.
For Moscow, establishing and even financing the Belarusian nuclear plant makes sense as it weakens the argument for a BRELLxit. Minsk is nominally an independent player and so the power supplies to the Baltics appear to have been diversified away from Russia to
an extent, reducing the political risks.
The decision will boil down to a
tussle between the economic and
the political arguments. Germany’s example of choosing to push ahead with the controversial Nord Stream 2 gas pipeline, where Berlin considers the plentiful supply of cheaper Russian gas to outweigh the political objects
of other European countries in the northwest corner of the union, suggests that economics will trump politics in the BRELL countries too.
VOX: Banking in a time of uncertainty – BCS GM diversifies out of Russia
Ben Aris in New York
BCS Global Markets is a fast grow- ing broker-dealer that has its origins in Russia, but has been diversifying into the UK and US. With offices in both countries it has been providing services in these markets for
its Russian clients but at the same time using the platforms to establish itself in
a number of niches. bne IntelliNews editor-
in-chief Ben Aris sat down with BCS GM’s CEO Roman Lokhov on the sidelines of the recent annual MOEX investment summit in New York to discuss the bank’s business.
Ben Aris: BCS grew out of its Russian domestic business but has become increas- ingly international. You recently became a member of the New York Stock Exchange
(NYSE), which is a first for a Russian bank. You now have offices in New York and in London with some 60% of revenues from non-Russian business. What is the idea behind the diversification and how have you managed it?
Roman Lokhov: The idea to diversify came several years ago after we gained
BCS GM CEO Roman Lokhov
www.bne.eu