By Naira Hayrumyan
ArmeniaNow correspondent
Amid continuing street protests against rising electricity tariffs in Yerevan, the fate of the Armenian power grid remains a key issue both in the sphere of Armenia’s internal political developments as well as on the agenda of Armenian-Russian relations. The Electric Networks of Armenia, the current operator of the grid, is owned by the Russian company, Inter RAO, but periodically information appears in the press to suggest that there are intentions to sell it.
The Russian newspaper Kommersant writes that among the likely buyers are two Russian businessmen of Armenian origin, including Samvel Karapetyan, the owner of Tashir Group. However, analysts in media do not rule out the possibility that the power grid will be bought by American or European companies.
Government officials in Yerevan do not comment on such a possibility. Minister-chief of government staff David Harutyunyan says one should wait for the results of the audit, but he does not rule out the probability of the company’s sale either.
It is clear, however, that the further vector of Armenia’s development may hinge on the fate of the energy system. Officially, without abandoning friendship with Russia, Armenia may set up partnership relations with Western companies in the energy sphere that will help “diversify” the South Caucasus nation’s foreign policy. At present, this course is clearly pro-Russian and, as some critics claim, it is leading to the loss of sovereignty.
Armenian Prime Minister Hovik Abrahamyan says a concept of energy security till 2036 is being developed at present. He speaks about large projects in this sphere, but does not disclose details.
Visiting Armenia these days is Masood Ahmed, the Director of the Middle East and Central Asia Department at the International Monetary Fund (IMF). Media inquired from Ahmed on Tuesday whether the IMF was familiar with the projects mentioned by the Armenian prime minister. He said that Abrahamyan had told him about those projects, too, but added, “It would be better if we got acquainted with them and analyzed them.”
The IMF official said that in the next three or four years a worsening situation is expected in the region, and, in particular, in Russia. And in order to ensure high indices it is necessary to attract large investments and remove barriers for investors.
He advised that the government in Yerevan pay attention to the opportunities that are being offered to the Armenian side. The lifting of Western sanctions against Iran, according to Ahmed, can attract also the Iranian capital to Armenia.
Head of the IMF mission to Armenia Mark Horton noted that the Electric Networks of Armenia had been sold to Russia under the Equities for Debt deal. If they had been sold through a tender, he said, the management would be more effective.
Horton noted that the energy system of Armenia needs large investments, because the system is getting worn out, with the main task being to build a new nuclear power plant. “In eight years, it will have to be replaced, and it will cost about $5 billion. It will be difficult to find that money. Therefore, strong partnership will need to be formed or Armenia will need to look for other options,” he said.
Horton did not elaborate as to what he implied by strong partnership. But it is clear that Armenia has been unsuccessful in forming “strong partnership” with the Russian companies that own Armenia’s energy system today. With the highest tariffs in post-Soviet space set in Armenia, Russian companies have been reluctant to invest in the development of the Armenian system, carrying out inefficient management.
Whether strong partnership with Western or even Iranian companies is possible remains to be seen, but it is clear that without “foreign-policy diversification” the Armenian energy system may find itself in a deep crisis that is only emerging today.