By Atom Markarian
Armenia secured on Tuesday a $150 million loan from the government of Japan to build a modern thermal power plant which officials said will considerably lower the average cost of power generation in the resource-poor country.
An agreement on the launch of the project was signed in Yerevan by Energy Minister Armen Movsisian and representatives of the Japan Bank for International Cooperation (JBIC). “This will be a very serious boost to our energy sector,” Movsisian said at the official ceremony.
“The Project is aimed at enhancing the power supply capacity of Armenia, thereby easing possible power shortages in the future and serving to develop the foundation supporting the economic growth of the country,” JBIC said in a separate statement.
The Japanese loan, repayable in 40 years, is to be used to finance the purchase of machinery and equipment, construction work and consulting services. The entire process will be overseen and supervised by JBIC. Tetsuo Ito, a senior official from the Japanese embassy in Moscow, said this will ensure that the implementation of the project is “free of corruption.”
The new gas-fired facility is to be built within the next four years in place of an aging thermal power plant in Yerevan that used to produce a large part of Armenian electricity. It will use the so-called “combined-cycle technology” that results in greater efficiency of gas combustion and cheaper electricity.
Movsisian explained that power generated at the modern plant will cost between 7-8 drams (about 2 U.S. cents). The electricity produced at Armenia’s largest thermal plant in Hrazdan is more than twice as expensive. Armenia will thus be able to save almost $20 million worth of natural gas every year, Movsisian said.
Cheaper electricity will be needed not only for domestic consumption but also the repayment of a $34 Iranian loan which is financing the ongoing construction of the 40-kilometer Armenian section of a pipeline that will deliver Iranian gas to Armenia. Armenia is to repay the loan with electricity supplies.
Movsisian made it clear that the new Yerevan plant will not serve as an alternative to the nuclear power station at Metsamor which accounts for nearly 40 percent of Armenian electricity output. Armenia has been under pressure from the United States and the European Union to decommission the Soviet-era facility.
“There are no conditions attached to this project, especially concerning the nuclear plant,” Movsisian told reporters. “This new facility simply can not serve as a substitute for the nuclear plant.”