By Atom Markarian
The Russian power utility Unified Energy Systems (RAO UES), the only foreign company taking part in the international tender for Armenia’s energy distribution networks, is likely to drop out of the bidding, a source close to the privatization process told RFE/RL on Wednesday.
The source that preferred to remain anonymous said RAO UES is leaning towards such a decision after the Armenian government’s rejection of a Russian offer to give up control of the networks in payment of its debt to Moscow. The government, under pressure from the World Bank and other Western donors, insists that the Russians pay for a controlling stake in the four Armenian power grids in cash, according to the source.
The Armenian and Russian governments have agreed in principle that Moscow will write off the bulk of the $90 million debt in exchange for obtaining substantial shares in state-run Armenian enterprises. But they have still to work out the final list of those enterprises.
Some analysts believe that the Russians are pushing for the inclusion of the power utilities put up for sale in the deal, something to which the Western donors are strongly opposed. The World Bank and the International Monetary Fund insist on their transparent and competitive privatization. They have argued in the past against the networks’ possible purchase by RAO UES and other Russian energy giants.
RAO UES’s apparent reluctance to pay for them in hard currency reflects its difficult financial situation. The company is still unable to ensure payment of electricity bills by most Russian customers. The Western donors believe that it lacks resources and expertise to end substantial losses incurred by the Armenian energy sector.
The Russian company’s failure to submit a bid before the December 1 deadline would mean the failure of the Armenian government’s second attempt to privatize the distribution networks. The source familiar with the tender said Yerevan and the donors are already bracing themselves for such an outcome.