The Mediamax Agency reported this morning that the U.S. Government’s Agency for International Development (USAID) is reviewing its assistance portfolio in Armenia following reports about the sale of the country’s energy distribution network to a subsidiary of a Russian company. RFE/RL also follows the story.

“If these reports are correct, this transfer occurred without following important Armenian government regulations which exist to protect Armenian consumers,” the U.S. government’s Agency for International Development (USAID) said in a statement. “As we wait for this situation to be clarified, USAID is reviewing its assistance portfolio to determine whether the success of some of its ongoing or planned projects would be undermined by any revised ENA ownership arrangement, or by a lack of due process in changing that ownership arrangement.”

Incidentally, this news follows harsh criticism from the World Bank on reports of transfer of ownership.

The Armenian authorities’ ambiguous stance has been criticized by the head of the World Bank office in Yerevan in unusually strong terms. Roger Robinson said last week that the lack of transparency and apparent legal violations in the process raise further questions about the state of rule of law in the country. He said that could have “complete implications” for continued World Bank lending to Armenia.

[…]

The power grids were privatized in 2002 as part of a decade-long reform of Armenia’s energy sector that has been supported by the U.S. government, the World Bank and other donors. A key component of that reform, which has transformed the resource-poor country into the region’s leading energy exporter, was the separation of facilities generating, transmitting and distributing electricity.

Energy Minister Armen Movsisian himself argued last March that UES, which already controls over 80 of Armenia’s power generating capacities, should not be allowed to get hold of ENA for that reason. The USAID likewise cited “potential negative effects that vertical integration in the energy sector might have on energy consumers in Armenia.”

The full report can be read online here.