Armenian regulators on Thursday formally allowed Russia’s Inter RAO group to sell Armenia’s national electric utility owned by it to a Russian-Armenian tycoon who has pledged to overhaul the heavily indebted company.
The Public Services Regulatory Commission (PSRC) made the decision one day after the announcement of the deal struck by Inter RAO and Samvel Karapetian’s Tashir Group mainly operating in Russia. It is still not clear how much Tashir will pay for the acquisition of the Electric Networks of Armenia (ENA) company.
Prime Minister Hovik Abrahamian stressed the importance of the deal at a cabinet meeting held later in the day. He said that the Armenian government itself asked Karapetian to take over the ENA earlier this year after Inter RAO “expressed a desire” to sell its loss-making Armenian subsidiary.
“At our request, Tashir Group has committed itself to ensuring that the company is managed in accordance with international standards and reducing its technological and commercial losses over the next five years,” Abrahamian told ministers. He indicated that the ENA will be managed by Kaskad-Energo, a Russian energy firm which is part of Karapetian’s business conglomerate.
Kaskad-Energo specializes in manufacturing low-voltage electric equipment and installing it at residential and office buildings and industrial enterprises.
In a joint statement with Inter RAO issued on Wednesday, Tashir said it has drawn up an “anti-crisis program” for the ENA that will involve “tighter controls” over the company’s finances widely believed to be embezzled by ENA staff. Tashir also pledged to embark on a “gradual modernization of the power grids’ equipment.”
The ENA has incurred mounting losses since 2010 despite repeated increases in electricity prices approved by the utility regulators. The most recent price hike announced by the PSRC in June sparked dramatic street protests in Yerevan. They forced the government to subsidize power supplies and thereby make the energy tariffs unchanged for households and some small businesses.
Abrahamian confirmed that Karapetian, who was born and lived in Armenia until the early 1990s, and the government will jointly finance the subsidy at least until August 2016. He cautioned, though, that it will only apply to individual and corporate consumers using up to 250 kilowatts of electricity per month.
Abrahamian estimated that nearly 80 percent of Armenians will be covered by the subsidy. He insisted that the other, wealthier households can afford higher tariffs.