Economist slams decision to nationalize Armenia's electric utility

The Armenian government’s move to nationalize the Electric Networks of Armenia (ENA) poses significant challenges to the country's investment climate and energy security. Panorama.am discussed the matter with economist Aghasi Tavadyan, founder of the data analytics platform Tvyal.com.

“It was a blunt and heavy-handed decision that has caused a range of economic, investment, political, geopolitical and legal complications,” Tavadyan stated. “In fact, some of these complications have already begun to surface; Europe’s arbitration court, which adjudicates such disputes, has issued a ruling to suspend the nationalization process. Clearly, there are serious underlying issues.”

Tavadyan emphasized that Armenia’s energy sector is already facing significant structural challenges. While the government had initiated reforms to liberalize the electricity market, leading to approximately 20% of the market being controlled by other players, those reforms remained incomplete and inconsistently implemented.

“Instead of continuing the path of market liberalization, the government has chosen a drastic approach likely influenced by the upcoming 2026 elections,” he noted.

Another critical issue is Armenia’s aging energy infrastructure, much of which dates back to the Soviet era and is ill-equipped to accommodate large-scale integration of renewable energy sources, particularly solar power. While the government has publicly encouraged solar energy development, Tavadyan argued that it has simultaneously introduced barriers that hinder its growth.

He warned that a rapid increase in renewable energy usage could destabilize the national grid unless billions of dollars are invested in infrastructure upgrades.

“Nationalization cannot solve all these problem as substantial investments. are required. The key question is: how can Armenia attract credible, long-term investors willing to commit billions to the energy sector if they fear arbitrary nationalization based on shifting government priorities?” the economist said, stressing that trust is critical for investors.

He stressed that instead of pursuing such sudden, politically tinged measures in the run-up to national elections, the government should have remained committed to the previous, more effective policy track of gradual reforms and liberalization.