Deloitte & Touche presents its proposals for improvement of Armenia’s energy system
YEREVAN, October 28. /ARKA/. Deloitte & Touche, a leading U.S. financial services firm, hired by the Armenian government to determine whether the recent rise in electricity prices in Armenia, which sparked street protests, was economically justified, presented today its second report.
The first report was published on September 30.
At the second stage, the company's specialists analyzed the dynamics of technical and commercial losses, levels of bad loans and collection of payments for electricity consumption.
Deloitte & Touche says in its report that Public Services Regulatory Commission, when it was established in 1997, created from nothing a system of regulation of several segments of Armenia’s economy, which properly functioned in energy sector throughout more than 15 years attracting new investors (Midland Resources Holding, Inter RAO, RusHydro and Contour Global) and retaining prices for consumers).
However, in 2012 the energy system started losing its balance because of some factors, such as decrease in hydro power plants' water flow, twofold increase of thermal power plants' fuel expenses, the market operator's errors in projecting hydro power plants' loading and the long-drawn repair of the Armenian Nuclear Power Plant, which led to a sharp increase in power prices for consumers (+70% over a period between 2013 and 2015) that undermined consumers' confidence in the regulator's steps and sparked massive protests in the country.
Taking into account all the above mentioned, Deloitte & Touche recommends the Public Services Regulatory Commission to raise transparency of its activity and ensure regular independent monitoring of the commission's decisions and release the monitoring results to public.
The company points out optimization of technical and commercial losses as one of expense-cutting instruments.
The Electric Networks of Armenia (ENA), Armenia’s national power distribution company was bought recently by Russia-based Tashir Group from Russian energy holding Inter RAO.
Tashir Group pledged to introduce the international ISO standards within five years and improve the management of the utility. The new owner has committed also to reduce at least by 2% technological losses of the company, which can play a significant role in improving the financial condition of the utility.
Tashir Group consists of about 200 companies, including 30 shopping malls and two dozen office buildings and hotels across Russia. With total assets estimated by the “Forbes” magazine at $4.5 billion, Samvel Karapetyan is one of the world’s richest ethnic Armenians.
The ENA is said to have more than $220 million in outstanding debts to Armenian power generating plants and commercial banks. It was sold to Russian Inter RAO in 2006 at $73 million by Midland Resources, a British-registered company. ---0---
The first report was published on September 30.
At the second stage, the company's specialists analyzed the dynamics of technical and commercial losses, levels of bad loans and collection of payments for electricity consumption.
Deloitte & Touche says in its report that Public Services Regulatory Commission, when it was established in 1997, created from nothing a system of regulation of several segments of Armenia’s economy, which properly functioned in energy sector throughout more than 15 years attracting new investors (Midland Resources Holding, Inter RAO, RusHydro and Contour Global) and retaining prices for consumers).
However, in 2012 the energy system started losing its balance because of some factors, such as decrease in hydro power plants' water flow, twofold increase of thermal power plants' fuel expenses, the market operator's errors in projecting hydro power plants' loading and the long-drawn repair of the Armenian Nuclear Power Plant, which led to a sharp increase in power prices for consumers (+70% over a period between 2013 and 2015) that undermined consumers' confidence in the regulator's steps and sparked massive protests in the country.
Taking into account all the above mentioned, Deloitte & Touche recommends the Public Services Regulatory Commission to raise transparency of its activity and ensure regular independent monitoring of the commission's decisions and release the monitoring results to public.
The company points out optimization of technical and commercial losses as one of expense-cutting instruments.
The Electric Networks of Armenia (ENA), Armenia’s national power distribution company was bought recently by Russia-based Tashir Group from Russian energy holding Inter RAO.
Tashir Group pledged to introduce the international ISO standards within five years and improve the management of the utility. The new owner has committed also to reduce at least by 2% technological losses of the company, which can play a significant role in improving the financial condition of the utility.
Tashir Group consists of about 200 companies, including 30 shopping malls and two dozen office buildings and hotels across Russia. With total assets estimated by the “Forbes” magazine at $4.5 billion, Samvel Karapetyan is one of the world’s richest ethnic Armenians.
The ENA is said to have more than $220 million in outstanding debts to Armenian power generating plants and commercial banks. It was sold to Russian Inter RAO in 2006 at $73 million by Midland Resources, a British-registered company. ---0---