How Perseverance Pays off in Power Sector Reform
Armenia’s power sector has suffered many setbacks: in the late 1980s an earthquake that took its major nuclear plant off-line, and in the early 1990s the collapse of the Soviet Union, economic blockade, and repeated sabotage of a new gas pipeline—all of which severely disrupted fuel supply. Technical and commercial problems further crippled operations. Armenians endured hard winters with barely two hours of electricity a day. The government set out to reform and privatized the sector, persevering through setbacks and learning from initial failure. Its persistence paid off: today the system runs efficiently and delivers power 24 hours a day.
The Agreement sets out how railway property may be assigned to the concession, and how specific properties, including land and other properties, can be assigned to the concessionaire for use but not with an ownership interest. The Concession allows for both infrastructure and train operation and for third party access including international traffic. The agreement also spells out how the government functions can be exercised (safety, oversight, financial accounting standards, etc) and describes the relationship of the various government agencies, including the Public Service Regulatory Commission and the Ministry of Transport and Communications, and other units of the government.
An indirect general policy framework for improving the legal environment and promoting PSP has been identified in Armenia (Poverty Reduction Strategic Paper). Armenia does not have a general concession Law. General laws do not refer to and regulate concessions (apart from the general reference in the Law on Foreign Investments providing that concessions are one of the forms of foreign investments). Two sector-specific laws regulate concessions, in the mining and water sectors. However, such laws do not contain clear definitions and need to be improved regarding the selection procedures (even though the general rule is that concessions are granted based on a tender/auction). In the water sector, the use of a model concession agreement is...