A Russian-Armenian businessman who recently acquired Armenia’s troubled electricity distribution network has pledged to end its massive losses blamed for a series of tariff hikes that led to dramatic street protests in Yerevan this summer.
“The Electricity Networks of Armenia (ENA) is a good company and a long-term asset, and it will become much better under our management,” Samvel Karapetian told the Russian publication RBCDaily.ru in an in interview published on Monday.
“We took over the company when it was trouble. It was loss-making but will become profitable,” he said.
“On the one hand, we want to sort out the company; on the other, we realize that it’s a strategic asset which affects the investment climate in the country. I am confident that we can change it,” added the Armenian-born billionaire whose Tashir Group conglomerate has a wide range of business interests in Russia.
Karapetian also indicated that Tashir will need at least 5 years to move the ENA back into profit. He said he regards the purchase of the loss-making utility as both “business and assistance to the homeland.”
Tashir bought the ENA from Inter RAO, a state-controlled Russian energy giant, in a deal that was cleared by Armenian utility regulatory in early October. The ENA has incurred mounting losses since 2010 despite repeated increases in electricity prices approved by the regulators. It had $220 million in outstanding debts to Armenian power plants and commercial banks as of September.
The most recent electricity price hike announced by Armenia’s Public Services Regulatory Commission (PSRC) in June sparked two-week demonstrations in Yerevan. They forced the Armenian government to keep the energy tariffs unchanged for most households and some small businesses through a subsidy.
The protests were driven by a widely held belief that Armenians are being forced to pay for widespread corruption within the ENA management. While defending the tariff rise, government officials acknowledged that the national electric utility has been mismanaged by the Russians.
In a written statement released later in October, Karapetian vowed to crack down on “corrupt employees,” modernize Armenia’s power distribution facilities and thereby cut ENA losses. That, he said, would enable the company to avoid further price hikes in the future.
The ENA is now reportedly managed by Kaskad-Energo, a Russian energy firm which is part of Tashir Group. Kaskad-Energo specializes in manufacturing low-voltage electric equipment and installing it at residential and office buildings and industrial enterprises.
Speaking to RBCDaily.ru, Karapetian declined to disclose financial details of the deal with Inter RAO. He said only that Tashir will gradually gain full ownership of the ENA. “At this point, 50 percent of its stock already belongs to us,” he said.
In a quarterly financial report released last month, Inter RAO said it has sold 25 percent of the ENA to Tashir for $8.25 million, suggesting that Karapetian’s group will likely pay a total of $33 million for the Armenian utility.An Inter RAO spokesman told RFE/RL’s Armenian service (Azatutyun.am) that the deal will be completed by the end of 2017.
Significantly, the Inter RAO report further revealed that as part of the deal Tashir Group also took over Armenia’s largest and oldest thermal power plant located in the central town of Hrazdan. Karapetian did not mention the aging plant in the interview.
Born and raised in Armenia, Karapetian, 50, built his business empire after moving to Russia in the early 1990s. Tashir Group currently comprises around 200 firms engaged in construction, manufacturing, retail trade and other services. With total assets estimated by the “Forbes” magazine at $4.5 billion, he is one of the world’s richest ethnic Armenians.
Karapetian’s Yerevan-based brother Karen is a member of the Armenian parliament affiliated with the ruling Republican Party. He previously worked as chief of President Serzh Sarkisian’s staff.