PSRC has agreed to large loan provided by institutional investors to  ENA to continue implementation of large-scale investment program

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.