Armenian government attacks on electricity supply lead to nationalisation rumours

Armenian Prime Minister Nikol Pashinyan has slammed the quality of the country’s electricity distribution network, leading to speculation of a possible move to nationalise a major Russian owned distributor.

On Wednesday, Pashinyan held consultations to discuss problems with the quality of the electricity supply, as well as possible solutions.

Electricity cuts have become more frequent in recent months, causing public discontent. 

At a debate on the issue in parliament earlier in September, the ruling Civil Contract party’s parliamentary head, Hayk Konjoryan, cited ‘mass complaints’ about power cuts which he said had caused damage to equipment and large losses for businesses.

During the debate, the Chair of the Public Services Regulatory Commission, Garegin Baghramyan, blamed the power outages on old and dilapidated infrastructure as well as mismanagement at the Electric Networks of Armenia company, which he said had a monopoly.

He said that the ֏298 billion ($770 million) investment pledged by Electric Networks of Armenia was just a tenth of what was necessary to modernise the electrical grid.

Konjoryan said that a ‘new toolkit’ was needed to resolve issues with Electric Networks of Armenia.

The attacks have led to some speculation that the government could make a move to take control of Electric Networks of Armenia.

The company was formed in 2002, and four years later it was sold to the Russian company Inter RAO. After posting losses of $23 million as of 2014, the company was purchased in 2015 by Russian-Armenian businessperson Samvel Karapetyan. Karapetyan is the President of Tashir Group. 

On Thursday, Zhoghovurd (‘people’), a newspaper associated with the opposition I Have Honour Alliance, speculated that the moves by the government aimed to ‘snatch the company’ from Karapetyan.

‘Representatives of Civil Contract have, in essence, not only come out against Samvel Karapetyan with their pressure, but are also showing their teeth to the Russian side and trying to send a message that they are freeing themselves from the Russian capital’, they wrote.  

A number of key sectors of the Armenian economy, including the rail, telecommunications, and electricity networks are largely owned by Russian companies.

The Property for Debt agreement signed between Armenia and Russia in November 2002 saw Armenia hand over five strategic objects to Russia in return for the forgiveness of around $95 million in debt.

The issue of power cuts has increasingly become a source of complaints in Armenia.

In August, the National Academic Theater of Opera and Ballet vowed to take legal action over what they said were constant power cuts, after a ballet performance was interrupted. The Electric Networks of Armenia denied responsibility, blaming the power cut on ‘deficiencies of the theatre’s electrical system’. 

Pashinyan addressed the issue in a Government session on 5 September, noting that all across Armenia there were a ‘very large [number of] complaints regarding the quality of electricity supply’. 

‘And the fact that we once had a power outage during the government session should have been a warning for all of us that something is not right there’, he said. 

He added that he expected explanations for the reasons and also a clear plan for a solution,  ‘because in my understanding the problem is getting worse’.

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