By Emil Danielyan
Armenia will hand over most of its major hydro-electric plants to Russia to settle the Metsamor nuclear power station’s huge debts to Russian fuel suppliers, officials said on Thursday. The move will further deepen the Armenian energy sector’s dependence on Moscow.
Under a tentative deal approved by Prime Minister Andranik Markarian’s government, the Russian side will write off $25 million of Metsamor’s $40 million debt in exchange for the ownership of the six plants known as the Sevan-Hrazdan Cascade. Built along Hrazdan River in the Soviet times, the facilities provide at least 15 percent of electricity generated in Armenia.
A statement issued following the closed cabinet session said the cascade will be privatized by a subsidiary of Russia’s state-run RAO Unified Energy Systems utility which has assumed Metsamor’s debt to the Russian TVEL nuclear operator. The remaining $15 million debt will be gradually repaid in the next two years with proceeds from the sale of Metsamor’s relatively cheap electricity, the government said.
The government had earlier promised to put the six hydro-electric plants on an international tender. A spokeswoman for the Armenian Energy Ministry, Lusine Harutiunian, told RFE/RL that selling them directly the Russians is now “more beneficial” for the government.
According to an agreement finalized in Yerevan by the Russian and Armenian governments on February 5, RAO UES will take over the Metsamor plant’s financial management to make sure that its debts are paid off on time. Harutiunian said two sides are still discussing details of the scheme and will likely sign a final agreement by the end of this month.
Metsamor, which accounts for roughly 40 percent of Armenia’s annual electricity output, owes the Russians $32 million for past supplies of nuclear fuel and needs an additional $8 million to pay for fresh deliveries. The remaining fuel can keep Metsamor’s sole reactor operational until the end of April. Armenian officials hope that the next consignment of Russian fuel will reach the facility by that time.
Armenia receives about 80 percent of its energy resources, mainly nuclear fuel and natural gas, from Russia. The resource-poor country became even more dependent on its traditional ally after ceding its largest thermal power plant to RAO UES as part of a Russian-Armenian equities-for-debt deal late last year. The sale of the Sevan-Hrazdan Cascade and the expected transfer of Metsamor’s finances to RAO UES will put almost the whole of the Armenian energy sector under Russian control.