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Iran, Armenia Sign New Energy Deal


Armenia - Prime Minister Hovik Abrahamian and Energy Minister Yervand Zakharian meet with Ali Salehabadi, managing director of Export Development Bank of Iran, Yerevan, 28Jul2015.

Armenia - Prime Minister Hovik Abrahamian and Energy Minister Yervand Zakharian meet with Ali Salehabadi, managing director of Export Development Bank of Iran, Yerevan, 28Jul2015.

Less than a month after reaching a landmark nuclear deal with world powers, Iran has committed itself to financing a new energy project with Armenia that should significantly increase Armenian electricity exports to the Islamic Republic.

The chief executives of the state-run Export Development Bank of Iran (EDBI) and an Armenian energy company signed an agreement in Tehran Sunday on the construction of a third power transmission line connecting the two neighboring countries.

"The EDBI will provide $91 million of a total of $117 million needed to construct the power line,” the Iranian news agency Fars on Monday quoted the bank’s managing director, Ali Salehabadi, as saying after the signing ceremony.

Salehabadi said the Armenian government will provide the rest of the funding. Work on the facility will get underway later this year and take 18 months, added the Iranian official.

The Armenian government has made no official statements announcing the signing of the deal.

Armenia already exports limited amounts of electricity to Iran through the existing transmission lines connecting the two countries’ power grids. That electricity is largely generated by Iranian natural gas supplied to Armenian thermal power plants.

Energy and Natural Resources Minister Yervand Zakharian said late last year that the third and more powerful line will allow for a more than fivefold surge in the Armenian energy exports. Accordingly, Iranian gas deliveries to the South Caucasus nation should also rise rapidly.

Armenia currently imports around 500 million cubic meters of gas from Iran annually, compared with approximately 2 billion cubic meters imported from Russia.

Salehabadi said the energy project will not only boost Armenian-Iranian energy ties but also connect Iran to Georgia’s power grid. “Georgia can take advantage of this electricity transmission line,” he said, according to Iran’s Press TV.

The Armenian and Iranian governments reached tentative agreements on this and other joint energy projects nearly a decade ago. They have repeatedly delayed their implementation not least because of international sanctions that were imposed on Iran over its controversial nuclear program. In particular, the Armenian government has had to impose serious restrictions on cash operations between Armenian and Iranian banks.

The sanctions are due to be gradually lifted in the coming months, under the nuclear agreement that was reached by, Iran, the United States and five other world powers on July 14. Official Yerevan was quick to welcome that deal, saying that it will facilitate Armenian-Iranian energy cooperation and earn Armenia other economic benefits. A senior Iranian diplomat similarly predicted a “concrete impact on Armenian-Iranian projects.”

Later in July, an Iranian delegation headed by Salehabadi visited Yerevan to hold talks with Prime Minister Hovik Abrahamian, Energy Minister Zakharian and other Armenian energy officials. Official Armenian sources said the planned construction of the transmission line was high on the agenda of the talks.

On August 1, Abrahamian discussed the matter in a phone call with Iran’s First Vice-President Eshaq Jahangiri. “Agreement was reached on starting the construction of the third Iran-Armenia power transmission line,” his press office said in a statement. It gave no details.

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