A Russian energy conglomerate plans to sell Armenia’s loss-making national electricity distribution company owned by it, Energy and Natural Resources Minister Yervand Zakharian confirmed on Wednesday.
A subsidiary of the state-run RAO Unified Energy Systems (UES) purchased the Electricity Networks of Armenia (ENA) utility from a British-registered firm in 2006. The $73 million takeover solidified Russia’s strong presence in the Armenian energy sector.
The ENA absorbed capital investments from its new owner and remained profitable until 2011. However, the network has since been making losses, resulting in an estimated $220 million in outstanding debts to Armenian commercial banks and power plants.
The Yerevan daily “Haykakan Zhamanak” reported last month that the UES is poised to sell its troubled Armenian subsidiary to the Tashir Group of Samvel Karapetian, an Armenian-born billionaire based in Russia. Karapetian’s brother Karen, who is a member of the Armenian parliament, did not explicitly deny the report in a special statement issued earlier this week.
Zakharian similarly did not rule out the possibility of such a takeover. “I won’t refute or confirm that,” he told a news conference.
Zakharian said the UES is indeed keen to sell at least a part of the ENA to another investor. But he did not go into details.
The minister accused the Russians of mismanaging the ENA. He said “the inefficient work of the company management” is one of the reasons why the Armenian power utility posted 37.6 billion drams ($78 million) in losses over the past three years in addition to its massive debts. “The losses result from theft, outdated equipment, [poor] quality of exploitation, and insufficient diligence of personnel,” he said.
Citing the need to end the losses, the ENA last week asked Armenia’s Public Services Regulatory Commission (PRSC) to allow it to raise its daytime electricity price for households by as much as 40 percent.
While criticizing the ENA management, Zakharian said a higher energy tariff would be justified. He dismissed suggestions that ordinary Armenians are effectively forced to pay for the company’s mismanagement.
The minister also said it is only natural that electricity is more expensive in Armenia than in Russia. “Armenia is not a transit country for gas or oil and it has no energy resources of its own,” he argued. “Why do you compare our [energy] tariffs with those of Russia?”