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Armenian Power Utility Denies Planned Takeover By Russian Giant


By Atom Markarian
The British-registered owner of Armenia’s low-voltage power grids on Monday effectively denied reports that it is about to sell the network to Russia’s state-run power utility, RAO Unified Energy Systems (UES).

The Yerevan daily “Haykakan Zhamanak” claimed at the weekend that Midland Resources Holding and UES have already finalized the deal and are now awaiting its formal approval by the Armenian government. The paper said the Russians will get the Armenian Electricity Network (AEN) for $80 million.

“Our company remains part of Midland Resources Holding and nothing has changed in its status,” the AEN spokeswoman, Margarit Grigorian, told RFE/RL. But she would not say if UES executives have indeed approached the network’s owner with a takeover bid.

The Kremlin-connected chairman of the UES’s board of directors, Aleksandr Voloshin, paid a low-key visit to Yerevan last November, meeting with President Robert Kocharian and other Armenian officials. No details of Voloshin’s talks are known.

The Armenian government sold the network to Midland Resources for $40 million in 2002 in the hope of ending its huge losses that were estimated to cost the state budget $50 million each year. The company, which is registered in a British offshore zone, also pledged to make substantial capital investments in the Soviet-era power grids.

AEN’s chief executive, Yevgeny Gladunchik, declared late last year that the network has finally begun to operate at a profit due to a sweeping restructuring and a crackdown on widespread fraud among its employees.

The World Bank initially voiced serious misgivings about the choice of the AEN owner, citing Midland’s lack of experience in the energy sector. However, the bank changed its assessment of the deal as the power utility began to balance its books.

“Haykakan Zhamanak” also claimed that the World Bank is now opposed to selling the network to UES which has been expanding aggressively across the region. The bank’s office in Yerevan declined to comment on that. Its spokesman, Vigen Sargsian, stressed only that AEN’s sale to another foreign investor can not go ahead without the Armenian government’s consent.
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