Economist warns Armenia’s power-grid nationalization could trigger costly arbitration battles

By Lia Avagyan

The Armenian government’s drive to nationalize the Electricity Networks of Armenia (ENA) risks unleashing the kind of multibillion-dollar legal disputes that have plagued other countries, prominent economist Tigran Jrbashyan cautioned on Saturday.

In a detailed Facebook post, the head of Ameria Management Advisory said nationalization should be a “last-resort remedy” because Armenia already possesses the legal tools needed to police monopolies that deliver public services. “With the current regulatory framework, the state can set tariffs, quality standards, and transparency rules for any infrastructure operator,” Jrbashyan wrote, adding that bypassing those mechanisms in favor of outright takeover would be “a highly risky step that could undermine investment confidence and embroil Armenia in international arbitration for years.”

His warning comes as the ruling Civil Contract party has introduced a two-bill legislative package that the National Assembly is scheduled to debate on Tuesday, July 1. The draft aims to nationalize ENA and amend the Energy Law to expand the grounds for expropriation. ENA, Armenia’s sole electricity distributor, has been owned by Russian-Armenian billionaire Samvel Karapetyan’s Tashir Group since 2015.

Karapetyan was arrested on June 18 on charges of inciting the overthrow of the government, shortly after voicing support for the Armenian Apostolic Church and Catholicos Karekin II—figures increasingly critical of Prime Minister Nikol Pashinyan’s administration. On the same day and in the days that followed, Armenian authorities also conducted large-scale inspections and temporary closures of Tashir Pizza outlets, another business in Karapetyan’s portfolio.

Jrbashyan cited several international precedents where similar nationalizations resulted in massive financial losses. In Venezuela, ExxonMobil and ConocoPhillips were awarded hundreds of millions of dollars in compensation following their 2007 expropriation. Bolivia’s 2008 nationalization of its gas sector led to a wave of lawsuits and long-term damage to its investment climate. In Argentina, the government was forced to pay $5 billion in bonds to Spain’s Repsol after taking over energy company YPF in 2012.

“These cases show the hidden price tag of headline-grabbing takeovers,” he wrote. “Armenia could face similar liabilities under investment treaties if due process is questioned.”

Jrbashyan urged Armenian lawmakers to commission an independent economic impact assessment and involve foreign experts before making any decision. He warned that rushing ahead with nationalization could have “catastrophic consequences” and said the government should instead rely on regulatory tools already available: tariff setting, quality control enforcement, transparency mandates, and the authority of independent regulators.

The government maintains that nationalization is justified by recent failures in ENA’s service provision, including blackouts that have reportedly damaged equipment and disrupted industrial operations. Minister of Economy Gevorg Papoyan said last week that the legislation is grounded in Armenian law and reflects the principle of overriding public interest.

ENA has rejected the accusations and defended its operational record, citing annual international audits and regulatory compliance. Its acting CEO Davit Ghazinyan said the company will pursue all legal avenues to challenge the takeover, including potential international arbitration under the Cyprus–Armenia investment treaty.

Also read: Could Armenia face a treaty claim for targeting electric utility?