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ARMENIA ACCUSES RUSSIAN-OWNED POWER COMPANY OF TAX EVASION
by James Goundry
Global Insight
October 24, 2011
On 19 October, the Investigative Department of Armenia's State Revenue
Committee (SRC) conducted searches of various offices belonging to
Electrical Networks of Armenia (ENA), the monopoly operator of the
power transmission and distribution network. The ARKA news agency
reported that the office searches and document seizures were part
of a criminal case launched by the SRC against ENA following a tax
inspection in which ENA was found to have failed to pay 1.9 million
drams (USD50.3 million) in income, profit and value-added tax (VAT), as
well as compulsory social insurance payments. ENA, which supplies power
to about 950,000 customers, is a wholly owned subsidiary of Russia's
majority state-owned Inter-RAO UES. Separately, the Russian firm
reported on 20 October that its net profits in the first half of 2011
rose 858% year-on-year (y/y), to 49.8 billion roubles (USD1.6 billion),
with revenue growth of 23% y/y and overall electricity generation
up 9% y/y to 62.205 billion kWh. Inter-RAO UES attributed its sharp
increase in net profits to its consolidation of assets via several
acquisitions as well as the issuance of additional company shares.
Significance:Inter-RAO UES has refuted the charges against ENA,
further warning that the office searches could destabilise Armenia's
electricity delivery infrastructure and threaten power supplies to
end-users. Indeed, power outages were reported on 21 October in
Yerevan, the capital. Although it is unclear if this is directly
attributable to the raids against ENA, the company announced on
20 October that the searches had resulted in a "partial loss of
manageability" of its operations. It is unclear whether the SRC will
take ENA to court over the issue, however, threats to electricity
supply may influence the government's decision. Armenia's electricity
sector is also beset by labour problems at the Metsamor nuclear power
plant (NPP), where more than 150 workers of the facility's 1,700
employees walked off the job after their demands for pay increases
were not met on 21 October. The Metsamor NPP produces around 40%
of Armenia's total power supplies.
by James Goundry
Global Insight
October 24, 2011
On 19 October, the Investigative Department of Armenia's State Revenue
Committee (SRC) conducted searches of various offices belonging to
Electrical Networks of Armenia (ENA), the monopoly operator of the
power transmission and distribution network. The ARKA news agency
reported that the office searches and document seizures were part
of a criminal case launched by the SRC against ENA following a tax
inspection in which ENA was found to have failed to pay 1.9 million
drams (USD50.3 million) in income, profit and value-added tax (VAT), as
well as compulsory social insurance payments. ENA, which supplies power
to about 950,000 customers, is a wholly owned subsidiary of Russia's
majority state-owned Inter-RAO UES. Separately, the Russian firm
reported on 20 October that its net profits in the first half of 2011
rose 858% year-on-year (y/y), to 49.8 billion roubles (USD1.6 billion),
with revenue growth of 23% y/y and overall electricity generation
up 9% y/y to 62.205 billion kWh. Inter-RAO UES attributed its sharp
increase in net profits to its consolidation of assets via several
acquisitions as well as the issuance of additional company shares.
Significance:Inter-RAO UES has refuted the charges against ENA,
further warning that the office searches could destabilise Armenia's
electricity delivery infrastructure and threaten power supplies to
end-users. Indeed, power outages were reported on 21 October in
Yerevan, the capital. Although it is unclear if this is directly
attributable to the raids against ENA, the company announced on
20 October that the searches had resulted in a "partial loss of
manageability" of its operations. It is unclear whether the SRC will
take ENA to court over the issue, however, threats to electricity
supply may influence the government's decision. Armenia's electricity
sector is also beset by labour problems at the Metsamor nuclear power
plant (NPP), where more than 150 workers of the facility's 1,700
employees walked off the job after their demands for pay increases
were not met on 21 October. The Metsamor NPP produces around 40%
of Armenia's total power supplies.