Minister Vows to Cut Huge Energy Losses

GLENDALE (RFE/RL)–Energy Minister Armen Movsisian said on Tuesday that huge financial losses incurred by the Armenian energy sector will shrink dramatically this year thanks to the ongoing government crackdown on widespread corruption and mismanagement. He claimed that efforts to restructure the state-run power generation and distribution companies are already bearing fruits.

"There have been quite serious reforms in the sector," Movsisian told a news conference–summarizing his four-month track record. "Those structural reforms have allowed us to increase the sector’s efficiency and improve its financial and economic indicators."

Armenia’s nuclear–thermal and hydroelectric power plants produced $180 million worth of electricity last year. But analysts believe that only two thirds of that actually reached consumers–with the aggregate losses totaling as much as $60 million. Half of them are officially considered "unjustified," or resulting from the widespread fraud and inefficiency that has plagued the sector for the past decade.

Movsisian declined to give his estimates of the annual losses–but pledged that they will decrease "by 2.5 to 3 times" in 2002. He said the first quarter of the year has already seen a major improvement–with the unjustified losses accounting for 15.4 percent of the overall electricity output–down from 21.7 percent registered during the same period in 2001.

First-quarter figures released by the energy ministry also show an improved of electricity bill collections. According to these figures–individual and corporate consumers paid for 90 percent of supplied electricity or 5 percent more than in January-March 2001.

Movsisian attributed the stated improvement to a sweeping overhaul of the loss-making power grids which have slashed some 3,200 jobs since December. The four power utilities were merged into a single enterprise in March as part of preparations for their possible lease to a foreign operator. The decision to restructure the electricity distribution networks was taken in December following the failure of two government attempts to privatize them.

Movsisian said that tighter discipline has also eliminated debts and delays in paymen’s for Russian natural gas used by the Armenian thermal power plants. "The gas problem does not seem to be on our agenda anymore," he said–alluding to periodical disputes between the government and the Russian gas exporter ITERA.

ITERA has repeatedly cut gas supplies to Armenia over unpaid debts. Last January it threatened to slash their amount by two thirds–accusing the Armenian side of failing to repay its $6 million debt for last year’s deliveries. But the flow of the vital fuel continued unchanged after talks in Moscow between Russian and Armenian officials.


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