By Atom MarkarianThe head of the World Bank’s office in Yerevan strongly endorsed on Friday the Armenian government’s controversial decision to hand over more energy facilities to Russia in return for temporarily avoiding a doubling of the price of Russian natural gas.
Roger Robinson also urged Armenians to come to terms with the resulting tightening of Russian control over their energy sector, calling it an inevitable “reality.”
“What I can tell is that it’s a very beneficial transaction to Armenia,” he told reporters. “I think the press and the Armenian public, when they discuss the details with the government of what’s been going on in the last month, will agree with my assessment.”
Robinson said he arrived at such conclusion after the Armenian government briefed him on details of its agreement with Russia’s state-controlled Gazprom gas monopoly. The Armenian public should also be informed about those details, he added.
The general terms of the deal have already been made public by official Yerevan and Gazprom. The Russian giant will get hold of an incomplete but modern power plant located in the central town of Hrazdan and gain a controlling stake in Armenia’s gas distribution network for $250 million. Most of the payment, $188 million, will take the form of free-of-charge supplies of Russian gas, which will keep its overall price virtually unchanged until the end of 2008.
Armenian leaders have presented the deal as a major achievement for Armenia, arguing that Gazprom has also agreed to spend at least $150 million on completing the Hrazdan plant. They have denied reports, initially confirmed by Gazprom, that the Russians will also gain control of an Armenian-Iranian pipeline currently construction.
But opposition leaders and other critics of the Armenian government present Russian takeover of the vital pipeline as a fait accompli. They have condemned the deal with Gazprom as a further serious blow to Armenia’s energy security and overall economic independence.
Robinson, however, downplayed the fact that Gazprom and other state-run Russian firms will now enjoy a near total control over the Armenian energy sector, saying that there is “nothing fundamentally wrong” with foreign ownership of any country’s utility services. “The important thing is to have a very strong regulator that sets the rules and monitors the rules for the delivery of public utility services,” he said, repeating arguments which he had made with regard to last year’s equally controversial sale of Armenia’s electricity distribution network to Russia’s national power utility.
According to Robinson, the fact that the foreign owners of Armenian energy assets are exclusively Russian is natural. “You all know the source of the most of the raw material for energy generation in Armenia,” he said. “That is current reality. Nuclear fuel for [the nuclear power plant at] Metsamor is coming from Russia, gas is coming from Russia through the Gazprom network.”
“When we talk about energy in Armenia and the sources of energy supplies, I would urge everyone to be reconnaissant of the fact that we have a reality at the moment,” added the World Bank official. “One can not change that reality in just two or five minutes.”