From Crisis to Stability in the Armenian Power Sector

by Sargsyan, Gevorg; Balabanyan, Ani; Hankinson, Denzel; Balabanyan, Ali

• ISBN13: 9780821365892
• ISBN10: 0821365894
• Format: Paperback
• Copyright: 2006-03-03
• Publisher: World Bank

Summary

The last fifteen years have seen Armenia emerge from Soviet rule and a severe economic and energy crisis, both complicated by its newfound political surroundings. The last ten years have seen significant reform and progress in the power sector which, when compared to the progress made by its neighbors, is all the more remarkable. The benefits of reform have not been easily won, however, and Armenia's success is a tribute to its ability to learn from mistakes and persevere. A combination of improper planning and bad fortune forced the Government of Armenia to go through three separate tenders for its privatization assets. A combination of good planning and good fortune ultimately allowed for what has turned out to be one of the region's most successful infrastructure privatizations so far.

Table of Contents

Acknowledgments	vii
Acronyms and Abbreviations	ix
Executive Summary	xi
How Did It Happen? A Brief Overview of Power Sector Reform	1	(10)
Why Reform was Necessary	1	(3)
Steps Armenia Took Toward Reform	4	(4)
What Reform Has Achieved	8	(3)
Was It Worth It? The Economic and Fiscal Outcomes of Armenia's Power Sector Reforms	11	(16)
Economic Benefits	11	(5)
Existing Externalities and Other Social Costs or Benefits	16	(3)
Fiscal and Financial Benefits	19	(4)
How Costs and Benefits Were Distributed	23	(4)
Lessons Learned From Armenia's Reform	27	(18)
Preprivatization	28	(5)
Privatization	33	(2)
Postprivatization	35	(2)
Role of the GoA	37	(1)
Role of the AERC	37	(2)
Role of the Donors	39	(2)
Role of MRH as a Different Kind of Strategic Investor	41	(1)
Concluding Lessons of Caution	42	(3)
Generalizing the Lessons Learned	45	(38)
Postscript	49	(4)
Appendixes
A Overview of the Armenian Power Sector	53	(8)
B Chronology of the Reforms	61	(8)
C World Bank Power Sector Conditionality in Armenia	69	(4)
D Lessons from Power Sector Privatizations Elsewhere in Europe and Central Asia	73	(10)
E Estimating the Welfare Benefits of Power Sector Reform in Armenia	83