Armenia Starts Large Scale Privatization

YEREVAN (Reuters)–Armenia–entering the final phase of its privatization program–will start selling off power plants and manufacturing enterprises this year–the privatization minister said on Wednesday.

Pavel Ghaltakhchyan told Reuters the focus of the program–begun in 1994 and due to end in 2000–would now shift to quality and away from quantity–in an effort to match industries still in state hands with buyers who can contribute the most to the national economy.

"We are putting an emphasis on the kind of investors we are selling to–so that we know what we will have in a few years time. Before it was a matter of getting state property into private hands as quickly as possible," he said.

While some small- and medium-size enterprises were sold off for vouchers distributed to the population of 3.8 million–the remaining property will be sold for cash.

Foreign entities and individuals have equal rights with resident investors in bidding on the final items–Ghaltakhchyan said.

Some of biggest items for sale will include thermal power generating stations at Vanadzor–Yerevan and Hrazdan–three hydroelectric stations–and the national power grid.

The country’s Soviet-type Medzamor nuclear power station–which produces about 20 percent of national output–will remain in state hands–he said.

The European Union is striving to get the station–closed for several years following a massive 1988 earthquake–shut down by 2004.

Also on the block are the Lyus electric light bulb factory–currently producing at a fraction of capacity–the Armelectromash electrical equipment factory–chemical plants and state-owned Armenian Airlines.

Some remaining enterprises–such as Lyus–have been offered in international tenders previously–but Ghaltakhchyan said the government had not done a good job of courting potential buyers. "We didn’t correctly market some of the enterprises," he said.

He added that big debts owed by some had also driven away potential investors. Some debts might be written off in order to unload them–and other terms adjusted to enhance their attractiveness–he said.

The Armenian government has come under fire from some political parties over its biggest privatization’s to date–a large part of the national telecommunications grid and the historic Yerevan brandy plant.

A presidential commission is currently looking into the privatization of the phone system–sold to an Armenian-American joint venture in 1995 and later acquired by Greek phone operator OTE.

Ghaltakhchyan admitted problems with the sale of the telecommunications system–but said there was no chance that any privatization’s would be overturned for political reasons–regardless of who wins Armenia’s May parliamentary election.

"The only way any privatization’s in Armenia will be annulled will be if the buyers do not live up to their contractual obligations," he said.

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