Russian company buys Armenian power grid – agency

Regnum, Moscow
12 Feb 05

[No dateline as received] In November last year Regnum news agency
reported about talks between the British trade and industrial concern
Midland Resources Holding Ltd and the RAO UES (Russia) [Russia’s
power grid monopoly Unified Energy System] on the sale of the Armenian
power grid. The press secretary of the Armenian power grid, Margarita
Grigoryan, officially denied reports from a well-informed source in
the company that the Russian holding would become the owner of the
Armenian power grid in January 2005.

Meanwhile, Yerevan-based newspaper Aykakan Zhamanak reported on 12
February that a subsidiary of the RAO UES of Russia, Inter RAO UES,
has bought the Armenian power grid from Midland Resources for 80m
dollars. The deal will be officially made public in April 2005, the
newspaper noted. Aykakan Zhamanak noted that the World Bank is roundly
against handing over the Armenian power grid to Russia. The newspaper
also alleged that “after the sale of the Armenian power grid, Russia
will not be the only one to control them”. [Sentence as published]

To recap, an agreement on the sale of the Armenian power grid was
signed in Yerevan on 26 August between the Armenian government and
the British trade and industrial concern Midland Resources Holding
Ltd. In accordance with the document, 80.1 per cent of the Armenian
power grid shares were sold to the concern for 37.15m dollars. The
British company was to pay 12.15m dollars for the shares and to
allocate another 25m dollars to the Armenian budget to cover the
Armenian power grid’s debts and to pay wage arrears.

The RAO UES of Russia owns the Sevan-Razdan cascade of hydro-electric
power plants and the Razdan thermoelectric power plant and controls
finances of the Armenia Nuclear Power Plant. The RAO UES set up the
International Energy Corporation closed-type joint-stock company in May
2003 for the management of the Sevan-Razdan cascade of hydro-electric
power plants, which was handed over to Russia to cover part of the debt
for the nuclear fuel delivered for the Armenian Nuclear Power Plant.

Finances of the Armenian Nuclear Power Plant have been placed in
trust management of Inter RAO UES, a subsidiary of the RAO UES,
(60 per cent of shares) and Russia’s state nuclear power holding
Rosenergoatom (40 per cent) for five years.

Probably, the sale of the Armenian power grid should be viewed in
the context of the RAO UES’ attempt to synchronize the power grids
of the entire region, including Georgia, Armenia and Azerbaijan.

Taking account of the fact that after the commissioning of the
Iran-Armenia gas pipeline, Armenia will export electricity to Iran
in exchange for the supplied gas, which is outlined in the major
agreement, the issue of synchronizing the Armenian and Iranian power
grids could also emerge on the agenda. Since the RAO UES is also the
owner of Georgia’s major power facilities, one can say that the RAO UES
is striving to synchronize the work of the power grids of the whole of
the region, including Armenia, Georgia and even Turkey in the future.