The landmark sale of Armenia’s largest hydroelectric complex to a U.S. energy company, which the Armenian government put on hold a year ago, has been finally completed, according to President Serzh Sarkisian.
Under the takeover agreement signed in Yerevan in January 2014, the New York-based group ContourGlobal was to pay $180 million for the Vorotan Hydro Cascade and invest another US$70m in its modernization. ContourGlobal was thus on course to become the first Western company to gain major assets in Armenia’s energy sector dominated by Russian companies, notably Gazprom.
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 Cascade, Yerevan, 29Jan2014.
The acquisition welcomed by the U.S. government was supposed to be formally completed by April 2014. However, Armenia’s new Prime Minister Hovik Abrahamian put the brakes on the deal shortly after his appointment, which coincided with that deadline. Abrahamian said that some of its provisions run counter to Armenian law and need to be renegotiated.
The move fuelled media speculation that Russia is pressuring Armenia to sell Vorotan to a Russian energy company instead. Armenian officials denied such pressure.
Energy and Natural Resources Minister Yervand Zakharian announced in January that the government and ContourGlobal are now close to sealing the renegotiated deal. “We will most probably complete the sale within a month,” he said.
President Sarkisian announced its completion late on Thursday as he met with leaders of the Armenian community in the United States during a visit to Washington. “I think that in a matter of days the American company ContourGlobal will start operating in the Armenian market with its $250 million investment capital, which will be the largest ever American investment in Armenia,” he said.
Sarkisian linked the Vorotan deal with the signing in Washington earlier in the day of the U.S.-Armenian Trade and Investment Framework Agreement (TIFA) which is meant to boost bilateral trade and U.S. investments in the Armenian economy. “This means that cooperation between the two countries’ entrepreneurs is encouraged at the state level,” he said.
U.S. - Armenian President Serzh Sarkisian meets with leaders of the Armenian American community, Washington, 7May2015.
Neither Abrahamian’s cabinet nor ContourGlobal has made official statements on the deal yet. Still, the U.S. company has already posted two job vacancies in Armenia on an Armenian employment website. “ContourGlobal is seeking a motivated Senior IT Support Manager to manage local IT Team and the technology related to the Vorotan Hydro Plants,” says one of the notices.
The Vorotan Cascade consists of three hydroelectric plants that were built in Soviet times on the mountainous Vorotan river flowing through Armenia’s 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 will do our best to contribute to Armenia’s energy security,” Garry Levesley, ContourGlobal’s vice-chairman, said after signing the initial deal with Zakharian’s predecessor, Armen Movsisian, in January 2014.