According to the Armenian energy officials, the power producing companies are in a deep financial crises. The overall debt to the energy sector is almost $250 million. Energy producing companies have decided to cut power supplies to the customers if they don't pay their debts.
The director of the Yerevan Electricity distribution network, Aram Ananian, told RFE/RL that his company is planning to recover at least 20 percent of the debt. "We are in a very difficult financial conditions and all energy producing companies are facing financial crises. They are unable to pay salaries to their workers, to buy necessary equipments and materials for production," Aram Ananian said.
Despite the fact that the individual energy consumers have very weak buying power, they are the ones who almost have no debt and pay electricity bills on time. Almost 85 percent of Yerevan residents paid their energy bills during winter season and starting from April, payments have increased reaching almost 98 percent, the head of the Yerevan Electricity Network said. Currently the city has stopped supplies of electricity to 5 percent of Yerevan residents who didn't pay on time.
There are 250,000 registered electricity users in Yerevan, but only 200,000 of them are using electricity. According to Aram Ananian, individual users and private companies are paying on time, they have the lowest debt. The situation is completely different with the public sector; state companies, hospitals, schools, irrigation water distribution system, electrical transportation, etc. These companies do not pay on time or do not pay electricity bills at all.
There are also companies that are almost immune from sanctions. "We can't cut electricity supply to Nairit and some other chemical factories for safety reasons", Ananian said. These companies have hazardous productions processes and without electricity they could cause a major industrial disaster. Despite that fact, the city is determined to cut the electricity to Nairit if it doesn't repay its debt of almost 2 billion drams ($3.6 million) to the City Electricity Network. According to Aram Ananian, the only way to solve this problem and to fix the financial issues is to privatize the electricity distribution networks. This will cut losses in energy supply, cut the number of workers and make the supply system much more efficient.