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Energy Privatization Again Fails As Investors Stay Away


By Hrach Melkumian

The Armenian government on Friday formally announced the expected failure of yet another attempt to privatize national power grids after no foreign company submitted a bid as the November 30 deadline expired.

“We received no bids as of 6 p.m. today. This means that the international tender is deemed failed,” Energy Minister Karen Galustian told reporters.

Galustian said that Russia’s Unified Energy Systems (UES) monopoly, the only energy firm to have seriously considered buying the networks, on Thursday officially informed the government about its pullout from the tender, citing a “lack of time to prepare its proposals.” Galustian denied that the Russians withdrew from the contest earlier this month after the Armenian government insisted that they pay for the power grids in cash.

Sources close to the bidding told RFE/RL earlier that UES wanted to take over the networks in return for Russia writing off the bulk of Armenia’s $94 million state debt. The World Bank and other donors were strongly opposed to the scheme.

Galustian assured that the debt-for-equity deal, currently discussed by Yerevan and Moscow, will not encompass the power distribution companies. He said the Armenian cabinet will decide on the networks’ fate next month.

The four state-run electricity companies were put on an international tender last year at the urging of Armenia’s donors. The World Bank, in particular, has made the release of a $20 million budgetary loan to Yerevan conditional on their privatization.

The government is now considering leasing, instead of selling, the loss-making networks to private operators. The World Bank is also reportedly leaning towards that option.
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