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Government To Seek Softer Terms For Energy Privatization


By Ruzanna Khachatrian

The Armenian government will ask the parliament next week to soften requirements for the privatization of the national power utilities which it hopes to complete in November, officials said on Monday. In a bid to boost foreign investors’ interest in the four energy distribution networks, ministers will submit draft amendments in a special law regulating their sell-off.

The proposed changes aim to “make the networks more attractive to potential buyers,” according to Gagik Minasian, chairman of the parliament committee on finance and economy. Minasian declined to specify their content, saying that the corresponding bill has not yet been sent to the National Assembly.

But sources said the cabinet will seek to remove the existing legal provision whereby a successful bidder can not purchase more than two electricity companies. The National Assembly may also be asked to allow the possibility of a “direct sale” of the networks without an international tender.

The first attempt to privatize the sector ended in failure last April when none of the two shortlisted Western companies, the Swiss-Swedish engineering group ABB and Spain’s Union Fenosa, submitted a bid. The government called a new bidding for the networks in late May, setting early November as the tentative deadline for its completion. The sell-off is a necessary condition for the release of the last $20 million installment of the $50 million Structural Adjustment Credit (SAC-IV) to Armenia approved by the World Bank.

Government sources close to the privatization process say ABB, Union Fenosa and a subsidiary of Russia’s Gazprom monopoly are now considering forming a single consortium to vie for a controlling stake in the networks.
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