By Hrach Melkumian
The Armenian government on Thursday effectively confirmed reports that its second attempt to privatize state-run power grids will again end in failure, with no foreign company willing to submit a bid.
Energy Minister Karen Galustian told RFE/RL that Russia’s Unified Energy Systems (UES) monopoly, the only company to have shown interest in sell-off, has “verbally” informed Yerevan that it will likely drop out of the bidding before the November 30 deadline. Galustian, however, disagreed that the international tender for the networks can already be considered failed, saying that the government commission handling it has received no formal notification yet from UES.
Still, the government appears resigned to what is seen as a major setback for its efforts to re-vitalize the loss-making energy sector by attracting foreign capital. Galustian confirmed that it is already considering leasing, instead of selling, the state-rung electricity companies to private operators. Sources told RFE/RL earlier that the World Bank, a key backer of the privatization process, is likely to back that option.
According to those sources, the Russians have decided to quit the bidding after the Armenian government’s insistence that they pay for the networks in cash. UES reportedly proposed to include the power grids in the list of Armenian enterprises that will be handed over to Russia in payment for Yerevan’s $93 million debt to Moscow. The two countries are currently negotiating on such a deal.
The World Bank and other Western donors are opposed to UES’s ownership of the Armenian electricity companies, pointing to its lack of expertise and difficult financial situation.