The new owner of Armenia’s debt-ridden electricity distribution network has reduced its massive losses within months after buying it from a state-controlled Russian company, Energy Minister Yervand Zakharian said on Wednesday.
Meeting with visiting executives of the Moody’s credit ratings agency, Zakharian praised the change of ownership and a resulting series of “measures” which he said have been taken at the Electricity Networks of Armenia (ENA) utility. “As a result, electricity losses there have decreased,” he said, according to his press office.
Those losses are now “close” to a 11.2 percent limit set by Armenian state utility regulators, added the minister. This has contributed to the “financial stability” of the country’s overall energy sector, he said.
The Tashir Group of Samvel Karapetian, a Russian-Armenian billionaire, acquired the ENA from Inter RAO, a Russian energy giant, in a deal completed in October. Karapetian pledged to make the troubled utility “much better under our management.”
Armenia - Billionaire Samvel Karapetian takes part in a Christmas Mass at the Armenian Apostolic Church's main cathedral in Echmiadzin, 6Jan2015.
“It will become profitable,” the Armenian-born tycoon said in December.
The ENA had 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 2015 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 made to pay for widespread corruption within the ENA management. While defending the tariff rise, government officials acknowledged that the power grids have been mismanaged by the Russians.
In an October statement, 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.