Russian Firm Pulling Out of Armenian Energy Sector

YEREVAN (RFE/RL) — A state-owned Russian company, RusHydro, has reaffirmed its intention to sell off Armenia’s second most important hydroelectric complex belonging to it.

The sale of the Sevan-Hrazdan Cascade would further reduce the presence of Kremlin-controlled companies in the Armenian energy sector heavily dependent on Russian gas and nuclear fuel.

The Soviet-era facility consists of seven hydroelectric plants built along the Hrazdan river flowing through central Armenia. It accounts for roughly 10 percent of Armenian electricity output.

The Armenian government handed over ownership of the Sevan-Hrazdan Cascade to Russia in 2003 in payment for the Metsamor nuclear plant’s massive debts Russian nuclear fuel suppliers. RusHydro acquired it from another state-run Russian firm in 2011. Russian media reported in 2015 that the energy giant, which operates most of Russia’s hydroelectric plants, is now prepared to sell its Armenian subsidiary.

The TASS news agency quoted RusHydro’s chief executive, Nikolay Shulginov, as saying on Thursday that his company has been negotiating with potential buyers. “One of them emerged but then vanished,” he said. “Another one has now popped up. We are now holding [negotiations.]”

Shulginov declined to name those companies or disclose RusHydro’s possible asking price for Sevan-Hrazdan.

Another Russian energy conglomerate, Inter RAO, essentially pulled out of Armenia in late 2015, selling the country’s debt-ridden electricity distribution network and largest thermal power plant to the Tashir Group of Samvel Karapetian, a Russian-Armenian billionaire.

RusHydro’s withdrawal would leave only one Kremlin-controlled company, Gazprom, owning a power-generating facility in Armenia: a thermal power plant in the central town of Hrazdan. Gazprom is also the country’s principal supplier of natural gas.

Gas is used for generating around one-third of Armenia’s electricity. The Metsamor power plant and hydroelectric facilities meet the rest of its energy needs.

The Armenian authorities now seem keen to diversify foreign ownership in the domestic energy sector. More than a year ago they sold Armenia’s largest and most modern hydroelectric complex, the Vorotan Hydropower Cascade, to the U.S. company ContourGlobal in a $250 million deal strongly backed by the U.S. government. And in March this year, an Italian company started building a new thermal power plant in Yerevan.