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Government Moves To Liberalize Armenian Energy Sector

Sep 7, 2017

The Armenian government approved on Thursday a package of draft legal amendments designed to liberalize the country’s energy sector.

A government statement said they will help to attract new “suppliers” that will be able to engage in wholesale sales of electricity. It said the “liberal model” for regulating the sector will also “stimulate interstate trade” in electricity, suggesting that the new players will be able to import or export it to neighboring Georgia and Iran.

The statement added that the resulting introduction of “certain elements of competition” in the Armenian energy market will not only make the sector more efficient but also benefit consumers.

Prime Minister Karen Karapetian’s cabinet first announced plans for such a liberalization in July. “We have already presented a plan of actions which will ensure that the energy sector switches to a new, liberal model by 2021,” Deputy Minister of Energy Infrastructures Hayk Harutiunian said at the time.

The U.S. ambassador to Armenia, Richard Mills, declared in June that U.S. energy firms could invest billions of dollars in the sector if the authorities in Yerevan open it up to competition and remove all obstacles to electricity exports to Georgia and Iran.

Harutiunian said in that regard that senior officials from his ministry already hold “regular meetings” with Mills and U.S. businesspeople to explore possibilities of “expanding American companies’ activities in Armenia’s energy sector.” Harutiunian noted that one U.S. company, ContourGlobal, already privatized Armenia’s largest hydroelectric complex two years ago in a $250 million deal strongly backed by the U.S. government.

Russian natural gas and nuclear fuel currently generate at least 60 percent of Armenia’s electricity. In addition, Russia’s Gazprom monopoly owns the country’s gas distribution network.

Karapetian managed that network from 2001-2010. He held senior executive positions in Gazprom subsidiaries in Russia before being appointed as Armenia’s prime minister in September 2016.