How Much Money Has the Armenian Government Offered for the Electricity Network?

The Armenian government has offered approximately 23.3 billion drams (about $62.3 million) to the shareholders of the Electric Networks of Armenia, specifically to the family of Samvel Karapetyan, on the condition that Karapetyan returns the dividends received over the last ten years, amounting to 23 billion 158 million drams.

The proposal for the full acquisition of the Electric Networks of Armenia (ENA) has come into the possession of the Azatutyun radio station, which reports that neither the government nor the owners of ENA are disclosing the content of the offer. Essentially, if the owner returns the dividends he received, the government's offer for ENA shares will amount to only 142 million drams (approximately $380,000).

Azatutyun had approached the Ministry of Territorial Administration and Infrastructure, asking for the price proposal made for ENA shares, the formula based on which that price was determined, and what the market value of ENA is. In response, the ministry stated that ENA had been on the list of objects subject to privatization decades ago, leaving the other questions unanswered. Later, the ministry informed that "discussions are ongoing and they cannot provide additional information on that matter." Meanwhile, discussions regarding the price offer ended on February 17, when the Minister of Territorial Administration and Infrastructure proposed an offer of 23.3 billion drams for ENA shares, stipulating that the owner must return 23 billion 158 million drams to ENA.

The media also reached out in writing to the temporary manager of ENA, Romanos Petrosyan, seeking to determine the market value of the company and the method by which the compensation was calculated. The company did not respond to the inquiry.

In late January of this year, Prime Minister Nikol Pashinyan announced that a market valuation of ENA was underway. Three months later, the government has yet to disclose the company's market value. Nevertheless, some data exist that may create a picture of ENA's worth, although they may not be complete. Thus, in the company’s report for 2024, it is noted that the company's equity is approximately 137 billion drams, which is about $367 million at today's exchange rate. Typically, the equity share reflected in the report represents the company's value without debts and other obligations, as well as future profitability calculations and brand value. However, the company's market value can differ from its equity value.

There is also another potential indicator concerning the price of ENA shares. From 2017 to 2022, ENA received loans from the European Bank for Reconstruction and Development, the Asian Development Bank, and the International Finance Corporation, and 100 percent of the company’s shares were pledged for acquiring these loans. The total amount of loans obtained by the company from these entities was at least $125 million by 2021, and according to procedures, international banks had to assess the value of the company's shares before providing the loans. Although this is not a publicly available number, it can be inferred that the value of the company’s shares was sufficient for these banks to grant $125 million in loans; otherwise, with a lower value and given the risks, agreements would not have been concluded.

According to the report, a significant portion of the dividends paid to Karapetyan, amounting to 22 billion 185 million drams, was paid with the approval of the aforementioned international organizations.