Minister: No evidence of mismanagement, theft at electricity distribution company

Minister: No evidence of mismanagement, theft at electricity distribution company


Discussions on the possible increase of electricity price continued on Wednesday at the National Assembly during the Question and Answer session with government members.

Opposition MPs made critical statements, saying that people must not pay for the “mismanagement and theft” by the Electric Networks of Armenia (ENA), and Minister of Energy and Natural Resources Yervand Zakharyan responded that there is no evidence of theft at the Russian-owned company.

Earlier the minister himself said that one of the reasons for the rising cost of electricity is mismanagement at the ENA.

“By January 1, 2015 the ENA has owned electricity producing state affiliated companies 15.8 billion AMD, 7.8 billion is an overdue debt. Besides the company’s debt to the banks exceeds $220 million. But this is not the whole story,” the minister said.

It proceeded from what the minister said that in conditions of the current electricity tariff the company will not be able to pay the debt.

MP Tigran Urikhanyan asked whether the government wants to turn to the Prosecutor General and ask him to open proceedings into theft allegations. In this matter, he said, he is ready to personally provide materials, names, information. The minister replied, “The Ministry does not possess any information, any facts to provide to respective bodies. If you help us in that matter, present that information that you mention and the names that you mention, and we are ready to proceed.”

According to the law, the Ministry of Energy and Natural Resources has no liabilities to run financial observations at the ENA. Nevertheless, it has been five months the Ministry, with a special committee, is conducting observations in the whole energy system, considering the losses.

“We found out all the reasons that could result in such big losses. A plan of action is being drafted and it has been presented to the ENA and the Armenian government, to carry out all the actions envisaged for the coming years. Upon our calculations, in the next two year losses will be decreased by 1-2 percent, which will lead to significant financial stability, corruption risks will also decrease,” Zakharyan said.

According to the minister, only last year the actual electricity loss at the ENA formed 14.5 percent, instead of the planned 12.5; a 2-percent annual loss makes around 5 billion AMD (about $10.4 million). Nevertheless, at the moment the Ministry does not possess any materials to be presented to respective bodies.

The Russian-owned company has asked the Public Services Regulatory Commission (PSRC) to consider a 40-percent rise in energy tariffs, which raised public concern. If approved, this would be the third increase in the tariff in the last three years.

According to the request, the ENA suggests 48 AMD daytime tariff instead of 42, and 38 AMD night tariff – instead of 32.
Since 2006 the ENA has been owned by Russian Inter RAO UES company, one of the shareholders of which is also the Russian state – the Federal Property Management Agency.