By Atom Markarian
The government indicated on Thursday its intention to allow a formal sale of Armenia’s electricity distribution network to a little-known subsidiary of Russia’s Unified Energy Systems (UES) group, saying that a relevant decision is all but ready.
A government statement said vaguely that the Energy Ministry was given until Sunday to “clarify” all terms of the deal between the outgoing foreign owner of the Electricity Networks of Armenia (ENA) and the UES subsidiary called Interenergo BV. Those clarifications concern “some issues relating to obligations” of the new owner, the statement said without elaborating.
The government’s press service refused to specify whether that means the Armenian authorities are trying to make sure that the Russians pledge to make badly needed capital investments in the power grid.
UES has been considered its facto owner since announcing last June a 99-year “management contract” with Midland Resources Holding, a British-registered firm that privatized ENA in 2002. The state-run Russian power monopoly paid $73 million for the right to not only manage the Armenian utility but also receive its profits.
The deal prompted concern from the World Bank and the U.S. Agency for International Development (USAID). They argued that under the terms of ENA’s privatization, Midland Resources could not sell it to another foreign investor without the Armenian government’s consent. Armenian officials and Midland executives countered that the June deal was not a formal acquisition.
UES eventually decided to formalize its ownership of ENA, filing relevant applications to the government and the Public Service Regulatory Commission (PSRC), a move welcomed by the Western donors. They have for years opposed Russia’s attempts to tighten its grip on Armenia’s energy sector but now appear have come to terms with that.
“A transparent and robust decision-making process, managed by a strong regulator, is key to protecting the interests of energy consumers,” USAID said in a statement on Thursday. “USAID is happy to continue assistance to the PSRC and others to ensure the design and implementation of such a process.”
“USAID will continue to observe, with interest, the process currently underway to evaluate and respond to [Midland’s] request,” added the statement.
The World Bank representative in Yerevan, Roger Robinson, likewise said on Tuesday that Midland and the Russian giant are acting “in compliance with the law of Armenia.”