Armenian parliament approves law enabling nationalization of electric grid

By Gevorg Tosunyan

Armenia’s National Assembly adopted on Thursday a legislative package granting sweeping new powers to the government and energy regulator, effectively clearing the way for the nationalization of the country’s sole electricity distributor, Electricity Networks of Armenia (ENA). The bill passed in its second reading with the backing of the ruling Civil Contract party and was opposed by two opposition factions.

The legislation amends Armenia’s laws on energy and regulatory oversight to introduce so-called “preventive measures”, allowing the head of the Public Services Regulatory Commission (PSRC) to initiate proceedings against licensed operators based on past violations—even those committed prior to the law's enactment.

In practical terms, the law empowers the regulator to demand changes in management, restructure corporate governance, appoint a temporary administrator, or effectively force the company into state hands under the justification of protecting consumers or energy system reliability.

The new provisions also grant the government a right of first refusal if more than 25% of a licensed utility’s shares or assets are up for sale, giving the state priority access to strategic infrastructure acquisitions. This right did not exist under the previous legal framework.

Critics say the changes were tailored to enable the nationalization of ENA, which is owned by Russian-Armenian businessman Samvel Karapetyan through a Cyprus-registered holding company. Prime Minister Nikol Pashinyan had signaled the move in mid-June, shortly after Karapetyan publicly supported the Armenian Apostolic Church, amid tensions between the Church and the government. “Either ENA compensates the people for the damage it caused, or it will be nationalized,” Pashinyan declared on June 18.

The legislation allows the regulator to act on recommendations from a government ministry if there is a “perceived threat” to the energy sector or a serious violation of consumer rights. These recommendations, combined with administrative proceedings, open the door to appointing temporary management and restructuring companies without court rulings or shareholder consent.

Opponents argue the new framework blurs the line between regulation and state control, enabling de facto expropriation under administrative pretexts. They also warn that applying the law retroactively—based on alleged service deficiencies documented at the Prime Minister’s instruction—raises major concerns about legal certainty and due process.

Analysts and business advocates have voiced alarm that the rushed adoption of the law will further erode investor confidence, already shaken by a wave of international arbitration cases Armenia is facing over previous government actions. These include disputes over the Amulsar gold mine, the North–South highway, and the Zangezur Copper-Molybdenum Combine, with combined claims potentially exceeding $1 billion.

Despite being presented as a consumer protection measure, the ENA case has become emblematic of deeper concerns about politicized governance, regulatory instability, and the weakening of legal safeguards for private investment in Armenia’s strategic sectors.

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