Forbes
July 22 2005

Russian Electricity Monopoly to Manage Grid
07.22.2005, 11:14 AM

Russia’s electricity monopoly Unified Energy Systems has acquired
the right to manage and receive profits from Armenia’s national grid
company for the next 99 years, UES said Friday.

The giant Russian utility paid US$73 million (euro60 million) in the
deal, which was signed June 23, making UES the effective owner of
the company – but sidestepping the need to seek approval from the
Armenian government as in the case of an outright purchase.

A spokeswoman for UES said Friday that the company would not comment
on the structure of the deal. She did not rule out, however, that
the company could acquire shares in the grid company – Electricity
Networks of Armenia – in the future.

UES had reported in its 2004 financial statement at the end of
June that it had paid the US$73 million (euro60 million) to buy the
company. It said Friday this information was not true and had been
mistakenly included in the financial statement.

State-controlled UES, hungry to cement influence in the former Soviet
republics, has struck several high-profile electricity deals with
Russia’s smaller neighbors.

In Georgia it controls a chunk of generation and power distribution,
and has negotiated generator-building deals in Tajikistan, which
supplies neighbors Afghanistan and Kyrgyzstan.

Mikhail Mantrov, the head of UES’ international division Interenergo
B.V., said Friday in Yerevan that UES also controls 10 percent of
the former Soviet republic’s electricity-generating capacity via the
Sevano-Razdansky hydroelectric power station.

British company Midland Resources Holding paid US$37 million (euro30.4
million) for Electricity Networks of Armenia in 2002, of which US$25
million (euro20.5 million) was earmarked to pay down the cash-starved
company’s debts and overdue wages.