By Shakeh Avoyan
Armenia’s national electricity company has requested more time for providing regulatory authorities with detailed clarifications of its controversial takeover by Russia’s state-run power monopoly that has prompted serious concern from Western donors.
The Public Service Regulatory Commission had given the Electricity Networks of Armenia (ENA) and its British-registered formal owner, Midland Resources Holding, until this Wednesday to present all details of the $73 million deal with a little-known subsidiary of RAO Unified Energy Systems (UES). The Russian conglomerate won full control over ENA’s management and earnings, making it the de facto owner of the utility.
“The Electricity Networks of Armenia is preparing the letter, but there are still a number of issues that need clarification,” ENA spokeswoman Margarit Grigorian told RFE/RL. “The company has asked the commission to extend the [August 17] deadline to August 22.”
Under the terms of its 2002 purchase of ENA, Midland Resources can not resell the increasingly profitable utility to any other company without the Armenian government’s approval. UES initially announced in late June that it paid the lump sum to purchase ENA. But it later clarified that the deal with Midland Resource was a management contract rather than a formal acquisition.
The government was clearly reluctant to clear up the situation, sparking speculation that it was aware of and even had a hand in the deal. The Public Service Regulatory Commission demanded explanations from Midland only after the World Bank and the U.S. Agency for International Development warned Yerevan last month that they could reconsider further assistance to Armenia. Also expressing concern was the Japan Bank for International Cooperation (JBIC) which pledged last March to finance a $150 million reconstruction of a big thermal power plant in Yerevan.
The Western donors have been a key driving force and sponsor of the decade-long reform of Armenia’s energy sector. One of the key goals of the reform was the separation of units generating, transmitting and distributing electricity. UES, which is owned by the Russian government, already controls 80 percent of Armenia’s power generating capacities. Energy Minister Armen Movsisian personally spoke out against the Russian giant’s involvement in energy distribution last March.
The World Bank spokesman in Yerevan, Vigen Sargsian, told RFE/RL that the bank’s further actions will depend on the content of the written clarifications to be submitted by ENA and Midland Resources. “We continue to closely follow developments,” he said. “Our office was the first to express concern about that deal. The issue remains at the center of our attention. It is also quite significant for other donor agencies.”