By Atom MarkarianThe long-running privatization of state assets in Armenia has entered its final phase and will be completed by the end of next year, a senior government official said on Thursday.
David Vartanian, head of the government’s main privatization agency, said that with the most attractive chunks of state property already sold off, the 12-year process is increasingly amounting to a liquidation of hundreds of debt-ridden companies.
“Many companies are being declared bankrupt or liquidated altogether,” Vartanian told journalists. “That process is apparently going on faster than the privatization process.”
According to the government’s Committee on State Property Management, 1,789 large and medium-sized enterprises and 7,178 small ones have been privatized since the launch of market-oriented economic reforms in Armenia. More than 80 percent of the nation’s Gross Domestic Product is now generated by the private sector.
The privatization has slowed considerably in recent years as the government has struggled to find buyers for its remaining economic assets, most of which have stood idle for years. Some 900 large and medium-sized firms had still to be auctioned off as of 2001. Only a tenth of them were privatized last year.
Under the existing rules, if a company is not sold for more than a quarter of its face value estimated by Vartanian’s agency, it is subject to dissolution. Its property is to be distributed free of charge among its employees. There are now 72 enterprises facing bankruptcy proceedings for that reason.
Vartanian claimed that many of their managers have deliberately disrupted auctions to get hold them for free. He said he thinks the government must lower the 25 percent price threshold to boost business interest in those entities.
Some of the government’s remaining lucrative businesses have been handed over to Russia over the past year in payment for Yerevan’s multimillion-dollar debts to Moscow. Those include Armenia’s largest thermal power plant and five hydroelectric stations. Another major deal was the $40 sale of Armenia’s power distribution network to a British-registered company.