By Astghik Bedevian
Armenia’s Public Service Regulatory Commission has delivered a confusing answer to persisting questions about the legality of the de facto purchase of the Armenian national electricity company by Russia’s state-owned power monopoly.
Midland Resources Holding, a British-registered firm that privatized the Electricity Networks of Armenia (ENA) three years ago, submitted to the commission on Monday written clarifications of its controversial deal with a little-known subsidiary of UES. The Russian conglomerate paid $73 million to win full control over ENA’s management and earnings, making it the de facto owner of the utility.
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 World Bank and other Western donors that have heavily invested in the decade-long reform of the Armenian energy sector have expressed serious concern about the deal, threatening to reconsider their further assistance to Yerevan. The warnings prompted the government-controlled regulator to demand explanations from ENA.
In a statement issued late on Tuesday, the commission said it has received a detailed letter from the power utility and will continue to ensure that its owner complies with all the terms of its operating license granted by the government. The statement also implied that it is the Armenian government that should determine the legality of ENA’s takeover by the Russians. It argued that the regulatory body was not a party to the agreement on ENA’s privatization which was signed by the government and Midland Resources on August 26, 2002.
The commission refused to elaborate on the statement on Wednesday. “We are not going to comment categorically for the moment,” its spokeswoman, Mariam Stepanian, told RFE/RL. “What the commission says is that we are not part of the government and that all protests should be addressed to them.”