Russian Owner to Sell Armenian Power Utility to Unknown Offshore Company

YEREVAN — The Russian energy conglomerate Inter RAO has asked the Armenian government to allow it to sell Armenia’s debt-ridden power distribution network owned by it to a little-known company registered in Cyprus, it was announced on Thursday.

The development comes less than three months after a fresh rise in electricity prices sparked two-week nonstop demonstrations in Yerevan which forced the government to subsidize power supplies in Armenia. The government also promised a special international audit of the Electric Networks of Armenia (ENA) utility. It is meant to determine whether the ENA has been mismanaged by Inter RAO.

Prime Minister Hovik Abrahamian announced the state-controlled Russian company’s intention to sell the ENA to the Cyprus-registered firm Liormand Holdings Limited at a weekly session of his cabinet. He instructed the Armenian ministries of energy, economy, finance and justice as well as the Public Services Regulatory Commission (PSRC) to look into the proposed deal and conclude whether it should be cleared by the government.

Inter RAO needs such clearance in accordance with an Armenian law enacted in 2001.

“All documents will be examined,” Energy and Natural Resources Minister Yervand Zakharian told reporters after the cabinet meeting. “We will provide more detailed information within one week,” he said.

Both Zakharian and the PSRC chairman, Robert Nazarian, said they know nothing about the owners and activities of Liormand Holdings

According to the Russian business news agency RBK, Liormand is owned by Marcuard Trust, an “international asset management firm” which is registered in Cyprus and has an office in Moscow. Citing an unnamed source close to Inter RAO, RBK also said on Thursday that the Russian giant has not yet agreed terms of the ENA’s sale with Liormand.

It was not immediately clear whether those obscure firms have any connection with Samvel Karapetian, an Armenian-born billionaire based in Russia. Karapetian’s Tashir Group was reportedly close to buying the ENA this spring. That Inter RAO is ready to sell its loss-making Armenian subsidiary was confirmed by Zakharian in May.

Russia’s now defunct Unified Energy Systems (UES) giant, of which Inter RAO is a successor, paid $73 million to acquire the ENA from a British-registered firm in 2006, solidifying Russia’s strong presence in the Armenian energy sector.

The ENA, which was privatized in 2002, absorbed capital investments from its new owner and remained profitable until 2011. However, the network has since been making losses, resulting in an estimated $220 million in outstanding debts to Armenian commercial banks and power plants.

On June 17, Armenia’s Public Services Regulatory Commission (PSRC) voted to raise electricity tariffs by 6.93 drams ($0.015 or 16.7%) per kilowatt-hour beginning from August 1. The decision gave rise to street protests in Yerevan and other cities.

The No to Plunder civil campaign which organized the protests blocked Marshal Baghramyan Avenue in central Yerevan with a two-week sit-in, demanding that the government reverse the price hike. Baghramian Avenue was unblocked by the police early morning July 6.

On June 27, following his meeting with Russian Minister of Transport Maksim Sokolov (co-head of the Russia-Armenia Intergovernmental Commission), President Serzh Sarkisian announced the upcoming audit of the Electricity Networks of Armenia, which originally sought a 40% rise. Sargsyan also said that the government would pay the tariff increase for households pending the completion of the audit.