Bill on Privatization of Electricity Distributing Companies Presented

YEREVAN (Noyan Tapan)–The privatization of electricity distributing companies will allow Armenia to become a permanent electricity supplier in the region–stimulate production and lower the risk for foreign importers–Minister of Energy Karen Galustian said at a special Parliament meeting Monday.

Presenting the bill on the privatization of electricity distributing companies–the minister stated that the privatization will ensure 100 percent collection of paymen’s for electricity.

According to Galustian–the residual value of the energy sector–considering the estimated depreciation in 1999–is $203 million. The privatization contract provides for investmen’s totaling $160,000,000 within five years–which will be stipulated in a business program to be presented to strategic investors by the government. The minister also pointed out that if paymen’s for electricity are regularly collected–maintenance and other problems including budget allocations and taxes–would be possible to solve. But even in this case additional funds for capital investmen’s will be impossible to receive. The system needs new equipment and introduction of new technology.

The minister said that the real level of collected electricity paymen’s is 60 percent with supernormative losses exclusive and 71 percent with supernormative losses inclusive. The volume of paymen’s will be raised due to the lowering of supernormative losses. First–strategic investors are interested in it as they are to pay 100 percent of the cost of the used energy to Armenergo–which–Galustian said–is possible to carry out in several directions: restructuring of enterprises and investmen’s–due to which the human factor will be minimized in collecting paymen’s.

The minister also explained that the credits issued by the World Bank ($21,000,000) and by the State Development Fund of Japan ($45,000,000) have not yet been disbursed. The relevant agreemen’s were ratified by the Armenian National Assembly last August. 60 percent of the funds are to be channeled to re-equip high and low voltage networks–and after the decision on privatization of low-voltage distributing networks was made–it was decided to channel all the credits to the modernization of high-voltage networks. The government is currently conducting negotiations with creditors over the matter.

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