A U.S. energy company acquired on Wednesday Armenia’s main cascade of hydroelectric plants in a $250 million deal that represents the single largest U.S. investment in the Armenian economy to date.
Under a takeover agreement signed with the Armenian government in Yerevan, the New York-based group ContourGlobal is to pay $180 million and invest $70 million in the three plants making up the Vorotan Hydro Cascade.
The Soviet-built facilities are located on the Vorotan river flowing through southeastern Syunik province. With a combined operational capacity of 405 megawatts, they are nearly as powerful as the Metsamor nuclear plant that accounts for roughly 40 percent of Armenian electricity production.
“We are thrilled to have the opportunity to play an integral role in the Armenian power system and to make a significant and lasting contribution to a key part of the country's infrastructure,” Joseph Brandt, the ContourGlobal chairman, said in a statement.
Armenia - Energy Minister Armen Movsisian (R) and Garry Levesley, vice-president of the U.S. company ContourGlobal, sign an agreement on the sale of the Vorotan Hydro Cascad, Yerevan, 29Jan2014.
Garry Levesley, Brandt’s deputy who signed the agreement in Yerevan, also stressed its significance. “We will do our best to contribute to Armenia’s energy security,” the government’s press office quoted Levesley as saying at the signing ceremony attended by Prime Minister Tigran Sarkisian.
John Heffern, the U.S. ambassador to Armenia, was also present at the ceremony, underlining Washington’s strong support for the acquisition. Heffern was reported to say that it will strengthen U.S.-Armenian relations.
The Vorotan cascade’s impending sale was announced by the U.S. State Department last November following a meeting in Washington of the U.S.-Armenia Joint Economic Task Force. The department said that the deal will be partly financed by the U.S. Overseas Private Investment Corporation (OPIC).
ContourGlobal already owns or operates 33 power plants in 17 countries, including Poland, Ukraine and Romania. “ContourGlobal has extensive knowledge and experience in operating in the region and looks forward to adding these significant power plants into our portfolio and making further improvements and investments in them,” Levesley said.
The U.S. firm plans to create 150 new jobs at the Vorotan plants as part of a six-year modernization plan envisaged by the deal.
The deal also marked a first-ever multimillion-dollar Western investment in Armenia’s energy sector dominated by Gazprom and other Russian energy companies.
The Armenian government has reinforced the Russian presence in the sector with a set of controversial agreements signed with Moscow in recent weeks. They raised from 80 to 100 percent Gazprom’s share in Armenia’s gas distribution network and granted the Russian gas monopoly 30-year privileges in the local energy market.