ArmInfo. The Public Services Regulatory Commission of Armenia (PSRC) gave its positive opinion on the transfer of 100% of shares of Electric Networks of Armenia (ENA) CJSC, owned by Liormand Holding Ltd (30%), Tashir Capital CJSC (70 %) in favor of the European Bank for Reconstruction and Development (EBRD), the Asian Development Bank (ADB) and the International Finance Corporation (IFC).
The pledging of shares secures the transaction for obtaining credit resources from the abovementioned international investors. PSRC made this decision based also on the government decision of August 27, according to which the executive body also approved the future agreement. The participation of the government was conditioned by the agreement stipulated between it and the previous owner of the ENA, as well as by the fact that the agreement with international institutional investors, as noted in the decision adopted by the PSRC, does not violate the reliability of the country's energy system, its safe functioning and state interests.
According to the ENA, we are talking about attracting credit resources in the amount of about 125 million US dollars, which will be used to increase the profitability of electricity. According to the government decision, ENA will attract up to USD 70 million from EBRD, up to USD 35 million from ADB and up to USD 20 million from IFC.
To remind, these funds will be attracted for a large investment program to modernize and increase the profitability of the work of the Electric Networks of Armenia. ENA's full-scale investment program is aimed at deep modernization and re-equipment of the entire property complex of the company. The total volume of the investment program, designed for 10 years, is USD 726 million. The main goal of the program is a set of measures to increase the profitability, operational efficiency of networks and improve their financial and economic indicators, as well as to significantly reduce the loss of electricity.
It should be noted that back in February last year, the Moody's Investors Service assigned the "Electric Networks of Armenia" company an investment corporate rating (corporate family rating - CFR) and an issuer default rating (probability of default rating) at the level of Ba2 and Ba2-PD, respectively. The forecast is "stable". In February this year, the rating agency confirmed this rating. The provision of such a rating was essentially unprecedented, since the rating scale exceeds the level of Armenia's sovereign rating (Ba3). As the press service of the ENA told ArmInfo then, while assigning the rating, they took into account such positive factors as: a transparent system of tariff regulation, long-term mechanisms for reimbursing costs and coordinated investments; a high level of financial and economic planning and unequivocal expectations of high profitability in the foreseeable future (license terms approved by the regulatory body until 2027); good financial performance achieved by the company in recent years; independence of the regulator from the government; stable status of the company in the electric power market of Armenia.
To note, this is not the first loan agreement signed between ENA and the aforementioned institutional investors. Earlier in the summer of 2020, the company raised $ 25 million and $ 20 million from EBRD and ADB, respectively, which were used to replenish working capital amid the coronavirus pandemic. Let us also remind that ENA was acquired by the Tashir Group of Companies, headed by a prominent Russian businessman of Armenian origin Samvel Karapetyan, from the Russian company Inter RAO in September 2015. The agreement provided for the acquisition of the electric power assets of the Russian energy holding in the Republic of Armenia - "Electric Networks of Armenia" CJSC and the Hrazdan TPP. "Electric Networks of Armenia" CJSC was established in May 2002 as a result of the merger of four state- owned regional companies for the distribution and sale of electricity: "Yerevan Electric Networks", "Northern Electric Networks", "Southern Electric Networks" and "Central Electric Networks". The main activity of the company is the regulated distribution and sale of electricity. The total length of the networks is 36 thousand km. The company serves about 985,000 consumers. "Electric Networks of Armenia" CJSC has an exclusive license for transmission and distribution of electricity in the territory of the Republic of Armenia at guaranteed tariffs calculated based on the company's costs and the regulated rate of return on invested capital. According to ArmInfo, the ceremony of signing an agreement with investors is scheduled for September 10.
