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German Loan To Boost Armenian-Georgian Energy Ties


Armenia - A newly refurbished energy distribution facility in Gyumri, 13Sep2014.

Armenia - A newly refurbished energy distribution facility in Gyumri, 13Sep2014.

The Armenian government secured on Tuesday an 85.2 million-euro ($105.6 million) German loan which it said will be used for synchronizing the national power grids of Armenia and Georgia through a new transmission line.

The state-run German development bank KfW disbursed the loan with an agreement which one of its senior executives signed in Yerevan with Finance Minister Gagik Khachatrian and the head of Armenia’s national electricity transmission network, Aram Ananian.

A statement released by the Armenian Ministry of Finance said the loan will finance the construction of the high-voltage line and a substation on Armenia’s border with Georgia. It said that Yerevan will also receive 20 million euros in grants and loans from the European Union for the same purpose.

The German and EU funding, the statement went on, will ensure the implementation of the first phase of a project designed to make the Armenian and Georgian power grids “operate in the same regime.” This will make it much easier for each country to import electricity from the other, according to the Finance Ministry.

Georgian Prime Minister Irakli Gharibashvili and Energy Minister Kakha Kaladze discussed the issue with their Armenian counterparts when they visited Yerevan in August. The Armenian Ministry of Energy and Natural Resources said at the time that two neighboring states will be able to more than triple mutual electricity supplies after the new transmission line goes on stream in 2018.

It was also officially announced during Gharibasvhili’s trip to Yerevan that a little-known company partly or fully owned by a Georgian businessman, Teimuraz Karchava, will invest $600 million in building a natural gas-fired power plant in northern Armenia that will supply electricity to Georgia. Under an agreement finalized by Karchava and Energy Minister Yervand Zakharian, the Armenian government will give the company tax breaks and guarantee “supplies of sufficient volumes of gas” to the plant. The precise dates of its construction are still not known.

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