Authorities` intention to suspend the ENA license clearly political  move - ENA Control Committee

ArmInfo.  The authorities' intention to suspend the electricity distribution license of the Electric Networks of Armenia (ENA) company reveals the government's deep- seated political goals, representing a new, overtly political round of property redistribution. This was stated in a statement by  the ENA Control Committee.

The Public Services Regulatory Commission (PSRC) of Armenia plans to  terminate the electricity distribution license of ENA, owned by  Samvel Karapetyan, on November 13.

This decision reveals the government's deep-seated political goals,  representing a new, overtly political round of property  redistribution.

The process began when ENA owner Samvel Karapetyan became the target  of a sham criminal prosecution.  Now the same mechanism is being used  against his business entities under the pretext of recognizing ENA as  a "public priority" and transferring it to state control. Terminating  a license without any justification for violating market or technical  standards constitutes a clear infringement of property rights.

This amounts to expropriation under the guise of compensation, which  contradicts Article 60 of the Constitution of the Republic of Armenia  and the principles of stability and predictability in the energy  sector.

Society will have to pay for the Pashinyan government's adventurism,"  the ENA Control Committee stated in a statement.

The previous day, the Public Services Regulatory Commission (PSRC)  published a draft resolution terminating the license of Electric  Networks of Armenia CJSC for the distribution of electricity  (capacity).  A vote on the draft is scheduled for November 13. The  draft states that the company "failed to comply or improperly  complied with" the requirements of the RA Law "On Energy" and the  PSRC, which could threaten the security and reliability of the energy  system, its components, and the rights and legitimate interests of  consumers.

In particular, it is noted that approximately 700,000 consumers are  connected to the automated metering and control system for  distributed electricity. During the administrative proceedings, it  was discovered that the company failed to ensure the complete  recording and security of electricity consumption data for these  consumers.

Furthermore, there were allegations of understatements and  overstatements of electricity consumption figures recorded at the  Geghama, Araks, Kars, and Debed branches. The commission emphasized  that "the understatements and overstatements were systemic and  widespread," which deprived the PSRC of the ability to objectively  assess the state of the system.

The PSRC claims that the ESA used its own funds, movable and  immovable property, to secure loan obligations of companies with  which it may have shared economic interests, totaling over $700  million.

Regarding the petition to suspend the powers of the Interim Manager,  according to the draft decision, the Commission does not have such  powers. The document refers to paragraph 3 of Article 52 of the RA  Law "On Energy", which states that "If a person deprived of a license  fails to meet the necessary conditions for obtaining a new operating  license or renounces the right to obtain a new license, then the  property complex in his/her ownership, which ensures the licensed  activity, shall be alienated, or the shareholders of the person  deprived of a operating license shall be offered the alienation of  the shares of this company by the Government of the Republic of  Armenia in a manner agreed upon with it. In the event of a person  deprived of a license failing to meet the conditions for obtaining a  new operating license or failing to alienate the property complex in  his/her ownership, which ensures the licensed activity, this property  may be alienated for state and public needs in accordance with the  procedure established by Article 28 of the Constitution of the  Republic of Armenia, on the basis of law, with prior equivalent  compensation. During the property alienation process, the Commission,  in order to protect consumer interests, appoints a temporary  administrator for the property of the entity revoked from its  operating license.

The decision can be appealed within two months to the Commission  itself or within 15 days to the Administrative Court of Armenia.

As a reminder, since 2016, Electric Networks of Armenia CJSC has  belonged to the Tashir Group of Companies, founded by  Russian-Armenian businessman Samvel Karapetyan. Armenian Prime  Minister Nikol Pashinyan announced his intention to nationalize ENA  following a search of Karapetyan's home and his arrest. Parliament  later adopted amendments to laws providing for the return of ENA to  state control.  The head of the Public Services Regulatory Commission  (PSRC) appointed Romanos Petrosyan as interim manager. Petrosyan told  reporters that he took up the position of interim manager of ENA CJSC  for the benefit of Armenia and its citizens. On August 9, Narek  Karapetyan, a shareholder of Electric Networks of Armenia and the CEO  of Tashir Capital, filed a lawsuit in the Administrative Court of  Armenia against the PSRC and its chairman, Mesrop Mesropyan,  demanding that the PSRC be declared ineligible to replace the  company's management.

On September 20, Prime Minister Nikol Pashinyan announced the  government's plans for Electric Networks of Armenia CJSC in  parliament. According to him, the process will proceed according to  several scenarios. The first is that Electric Grids is nationalized  and transferred to reliable private management, remaining fully  state-owned. The second is that a controlling stake in the company is  transferred to a reputable international energy manager. "In any  case, the Republic of Armenia will retain a stake sufficient to  ensure the government's strategic presence in this vital  infrastructure," Pashinyan said. The authorities will resort to the  second scenario only if it becomes clear that the costs under the  first scenario are disproportionately high for the state budget.