Russia plans to sell a unit of OAO MRSK Holding to help fund a revamp of the power industry as it merges the largest distributor with national network operator Federal Grid Co., Energy Minister Alexander Novak said.

The sale of the unit, which hasn’t been determined yet, will be “a pilot project” for privatization and may happen as early as the first quarter of 2013, Novak told reporters in Yalta, Ukraine, late yesterday.

“A consultant will be hired to evaluate a MRSK unit that will be privatized,” Novak said. “We propose keeping the money within this MRSK subsidiary to help fund modernization.”

A government commission headed by Deputy Prime Minister Arkady Dvorkovich is due to present proposals for completing the merger of MRSK and Federal Grid by October, Novak said.