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Government Seeks Parliament Consent For Last Privatization Push


By Ruzanna Khachatrian and Emil Danielyan

The Armenian government on Thursday formally submitted to the parliament a list of over 900 large and medium-sized enterprises, including strategic industries in the mining and energy sectors, which it wants to privatize in the next three years. The sale of the state-run businesses would mark the virtual end of the decade-long privatization process in Armenia.

Minister for State Property David Vartanian outlined the main points of the plan to deputies ahead of Friday’s debates which will see the government come under renewed attack from opponents of economic liberalization.

Left-wing parties in the National Assembly have already voiced their opposition to what is likely to be the authorities’ final privatization push. The biggest of them, the People’s Party of Armenia (HZhK), insists that the state retain a controlling 51 stake in all big factories put up for sale.

The success of the three-year program would leave almost the whole of the Armenian economy in private hands. The transformation would be particularly sweeping in the energy sector. Apart from the four national electric utilities, the government seeks to privatize the main thermal and hydro-electric power stations that account for roughly half of the country’s annual electricity output.

The plan envisages the sell-off of four big metallurgical companies extracting and processing copper and molybdenum ores, one of the country’s main export products. Three of them are located in the economically depressed southeastern province of Syunik. Also up for grabs would be several chemical factories, including the famous Nairit giant in Yerevan.

The government hopes to privatize 40 percent of the listed enterprises within the first year from the program’s launch. But Vartanian said it will not rush to give up control of them unless it receives attractive bids. “I believe that if there are no good proposals it’s not worth privatizing them,” he told the lawmakers.

Some of the businesses in question were left over from the previous three-year program of privatization launched in 1998. Hamstrung by huge debts and loss of traditional markets, they have so far attracted few potential buyers. Some 1,200 small businesses remaining under state control face similar problems.

Privatization in Armenia officially started in 1991 with a comprehensive government program on agricultural land. By the end of 1999, 90 percent of agricultural land was owned by private farms free to sell and buy it. A large-scale privatization of other sectors of the economy got underway in 1995 with a distribution of vouchers to every Armenian citizen. According to official figures, over 1500 or 76 percent of medium-sized and large enterprises and more than 6800 or 83 percent of small businesses were privatized as of August last year.

However, the total amount of state revenues from the entire privatization process stood at a meager $250 million as of August 2000, reflecting, among other things, the lack of foreign investments in the Armenian economy.
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