World Bank Concerned About Sale Of Armenian Power Grids

By Atom Markarian and Emil Danielyan

The World Bank expressed on Friday serious concern about the reported purchase of Armenia’s electricity distribution network by a state-run Russian company, demanding official and clear explanations from the authorities in Yerevan.
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The RAO Unified Energy Systems (UES), Russia’s main power utility, announced on June 30 that one of its subsidiaries called Interenergo BV has paid $73 million to gain control of the Armenian Electricity Network (AEN or ENA). The Russian giant said the deal took the form of Interenergo buying Midland Resources, a British-registered firm that purchased AEN in 2002.
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{Interenergo, an} obscure firm was set up in a Dutch tax haven last year with a reported authorized capital of just 150,000 euros ($180,000). Its other shareholders are not known.
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Under the terms of AEN’s $40 million privatization, Midland Resources, which is in turn owned by a Canadian businessman, needs the Armenian government’s permission to resell the power grids to any other foreign investor.
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AEN was sold to Midland Resources without a competitive and transparent bidding in September 2002. The deal drew strong criticism from Western donors, with the World Bank putting on hold further loans to Yerevan at the time. It remains to be seen if the government will face similar consequences if it fails to address the bank’s concerns this time around.

In the meantime, the bank’s governing board approved on Thursday the release of a new $20 million to Armenia. Robinson said the money will be lent to private Armenian firms involved in agribusiness.

Note: Above are excerpts from the article. The full article appears here. Clarifications and comments by me are contained in {}. Deletions are marked by [...]. The bold emphasis is mine.