PPPI Resource Library: Energy (go back)

		Energy Title: From Crisis to Stability in the Armenian Power Sector Author(s): Gevorg Sargsyan; Ani Balabanyan; Denzel Hankinson Posted Date: Wednesday, May 09, 2007 Keywords: Conditionality, Debt, developing countries, economic value, Economic Welfare, Energy Consumption, Energy Efficiency, expenditures, Externalities, Fuels, Imports, natural resources, oil, Power Plants, property rights, quality standards, quotas, Social Costs, Structural Adjustment, tax revenue Copyrights: The International Bank for Reconstruction and Development / The World Bank Type: File Decription: In the wake of the Soviet Union’s collapse,Armenia, like other former Soviet republics, began to struggle with the implications of its newfound independence. In the electricity sector, this meant learning how to manage and sustain a fragment of a system that had never been designed to function as a stand-alone grid. Armenia’s electricity system—and, indeed, its entire energy supply system—had been designed to operate as part of a much larger, integrated Trans- Caucasus system. Plants were built to run on fuel imported from thousands of miles away, from neighbors who, with the Soviet Union gone, could offer little certainty that such supply would continue under terms that Armenia could afford. The problems with this system began to show in 1992. The start of the war over Nagorno Karabakh, and the resulting imposition by Azerbaijan and Turkey of an economic blockade, cut off Armenia’s only source of gas and oil for its thermal plants. Four years prior to that, a massive earthquake had forced a shut down of the Medzamor nuclear power plant, a source of roughly one-third of Armenia’s generating capacity. Supply from a new gas pipeline, built in 1993 through neighboring Georgia, was regularly interrupted by acts of sabotage. Armenia was left to rely almost entirely on its hydropower resources, at great expense to Lake Sevan, one of the country’s most precious natural resources. Between 1992 and 1996, customers suffered through several of Armenia’s brutal winters with little more than two hours of electricity per day. The hardship was compounded by the economic collapse that followed independence and was more severe in Armenia than in other countries because of the economic blockade. Download File: From Crisis to Stability in the Armenian Power Sector .pdf (962K)