The European Bank for Reconstruction and Development (EBRD) is making an equity investment in four regional distribution companies in Armenia in order to support the government of Armenia’s efforts to privatise the power sector. The bank intends to take up to 19.9 per cent of the capital in each of the four companies at the time of their privatization.
Privatisation of the distribution companies is considered vital to the future of the Armenian power sector. In spite of increased tariffs the high levels of losses in the distribution networks cripples the cash flow within the sector.
Armenia adopted a progressive Energy Law in 1997 and subsequently established an independent regulatory authority for the sector. The involvement of the EBRD in the sale of the distribution companies is expected to make the sales more attractive to strategic investors, each of which is expected to purchase 51 per cent of the distribution companies.
The bank will pay the same price as the strategic investors in each company. The tender process is currently underway, with completion scheduled for 31 March 2000.
