Moody`s assigns B2 rating to Electric Networks of Armenia

ArmInfo. Attracting financial resources for the investment program of Electric Networks  of Armenia is the easiest task, but it is much more difficult to organize the work correctly, Director General Karen Harutyunyan told reporters on February 14.

According to him, international investors trust the company and are  ready to provide the necessary financial resources, but it is  necessary to understand that these investments must be returned  through tariffs. However, their increase will lead to large-scale  social problems. The management of ESA and its owner are doing  everything possible to solve the main problems in order to improve  the quality of electricity supplies to subscribers. "From 2016 to the  present day, the volume of investments has increased fivefold. This  happened not only due to attracting credit resources, but also due to  its own income. The owner of the company, represented by the Tashir  Group of Companies, in accordance with current legislation, had the  right to receive annual dividends, but refused them in favor of  investment programs. In the period from 2016 to 2023, investment  volumes amounted to $680 million. And this despite the fact that the  company's loan portfolio today amounts to $280 million," the general  director noted.

The CEO also pointed to the growth of the company's image. The  international rating agency Moody's assigned CJSC Electric Networks  of Armenia a B2 rating, which is the highest in the republic. Only  2-3 companies have a similar rating throughout the region.

As for outages, as Harutyunyan noted, over the past few years this  figure has been reduced by 50%.  "The subscriber should know that if  the duration of outages in Yerevan is more than 4 hours and more than  8 hours in the regions, the company pays him up to 2.5 thousand drams  in the form of a fine. At the same time, the subscriber does not need  to contact the company, this happens automatically. In the past,  About 600 million drams were allocated for these purposes," the  general director said.

He recalled that the company has been working with international  financial institutions since 2016 - the Asian Development Bank, the  European Bank for Reconstruction and Development, as well as the  World Bank represented by IFC. This made it possible to attract loans  at interest rates below market rates, and often even lower than the  loan funds attracted by the state. Since 2016, when the owner took  over the management of the company, loans have been raised without  government guarantees.

He also said that one of the main problems of the company today is  connecting new subscribers. In 2023, compared to previous years,  there was an unprecedented, almost threefold, increase in these  connections. Only in terms of population in new residential  multi-storey buildings we are talking about connecting 36,648 new  subscribers, which is equal to the residents of one city of Abovyan.  In the coming years, according to those programs for which there have  already been applications and which are predicted, only in Yerevan  the number of new connections, mainly from residents of multi- storey  residential buildings, will be equal to the consumers of Vanadzor and  Gyumri.

In turn, Armen Arshakyan, director for economics and finance at ESA,  said that in the period from 2024 to 2030, Electric Networks of  Armenia CJSC will invest 461 billion drams or about $500 million in  the development of the republic's network economy, which is an  unprecedented figure only on the scale of the republic, but  throughout the region. Investments will mainly be directed to solving  such problems as reducing technical losses and completely eliminating  commercial losses, as well as reducing accidents and improving the  quality of service to the population. In parallel, serious measures  will be taken to expand networks, reduce losses, connect new  subscribers, as well as implement charitable and environmental  programs. Until 2015, when the company came under the control of the  Tashir Group of Companies, on average, investments ranged from 5 to  12 billion drams.  Moreover, this work was not ordered; it was more  of a situational nature.

Since 2016, Arshakyan continued, 235 billion drams have been invested  in the network economy, or an average of 30 billion drams annually  excluding VAT. As a result of the measures taken and investments  made, technical and commercial losses were reduced to 6.6%.