Armenia restructuring and privatising electricity sector

Apr 12, 1997 02:00 AM

Armenia is preparing to privatise its electricity sector, which only two years ago was struggling to provide a couple of hours of power per day, Economy Minister Vagram Avanessian said. "I think the first privatisation can take place in 1998," he told at the annual meeting of the European Bank for Reconstruction and Development. The World Bank is helping to organise the sell-offs.
Avanessian said a timetable for restructuring and privatising the Armenergo network could be drawn up in the next three months. Some pilot projects, involving privatisation of small hydro-electric plants, were already going ahead, he added. EBRD banking team director Olivier Descamps said the energy requirements of the landlocked southern Caucasus country were enormous. "The government is committed to raising money and finding foreign partners," he said. "We believe better management will support future investment."
Avanessian said that there should be an international tender to select experienced operators forthe power companies. The government will probably keep a majority stake in the generating firms, while giving a strategic partner 100 % operating responsibility, he said. The 50 or so distribution companies will be reduced to 5 financially viable firms before shares in them are sold.
Armenia, with a population of 3.7 mm, is reforming its electricity charges to take into account the cost of production. Charges are now several times higher than two years ago and households and businesses are receiving regular supplies, provided they can pay for them.

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