ABSTRACT
This chapter analyses the options of institutional choice in the phase of transformation in a sector with special characteristics. Network-oriented sectors like electricity supply, natural gas supply, telecommunications, and railways, even in a market economy, have some peculiarities which have led to special arrangements. Transformation needs time and has to be built up out of the changes within the microstructures of the economy rather than through new rules developed by central rule setters alone. Although the production of fuel and electricity has been decreasing Russia is the major producer of natural gas and the second largest producer of electric power. The energy intensity of industrial production is much higher in Russia. In the Soviet economic system the power sector was ran by two ministries: the Ministry for Energy and the Ministry for Nuclear Energy. In general, the Russian government has decided to change the market order in the electricity sector by introducing privatisation.
