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Vorotan Cascade Deal ‘Important’ For Armenia’s Energy Diversity


Armenia - Vorotan Hydropower station, undated
Armenia - Vorotan Hydropower station, undated

The United States considers the latest acquisition of Armenia’s main cascade of hydroelectric plants by an American company to be important for the South Caucasus nation’s energy diversity and independence.

Speaking at a news briefing in Yerevan on Friday, U.S. Ambassador to Armenia John Heffern stressed that the takeover agreement signed with the Armenian government on January 29, under which 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, represents the single largest U.S. investment in the Armenian economy to date.

Armenia - U.S. Ambassador John Heffern at a news conference in Yerevan, 18Apr2013.
Armenia - U.S. Ambassador John Heffern at a news conference in Yerevan, 18Apr2013.
The deal also marked a first-ever multimillion-dollar Western investment in Armenia’s energy sector dominated by Gazprom and other Russian energy companies.

“Every country needs energy diversity and energy independence, and that’s a very important thing for the U.S. and Armenia both,” Heffern said.

The Armenian government has reinforced the Russian presence in the country’s energy 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.

United Nations energy expert Ara Marjanian believes the Vorotan Cascade deal will give a little more balance to the situation in Armenia’s energy sector and contribute to its diversification, which meets Armenia’s interests.

“It is also reassuring that the American side plans certain investments, which means modernization or perhaps even eastward expansion of the Vorotan Cascade in the future. An American partner comes to Armenia’s energy, finance and business market, which will bring in, to say so, a little more cultural diversity in our field, will make it work more efficiently, more transparently and more decisively,” Marjanian told RFE/RL’s Armenian service (Azatutyun.am).

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.
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.
Armenia’s Minister of Energy and Natural Resources Armen Movsisian thinks that the conclusion of the deal means that Western countries consider the Armenian economy to be quite attractive and, therefore, they invest in the country’s energy sector.

“Besides the acquisition, the agreement implies quite serious investments in the Vorotan Cascade for its modernization and prolongation of its life. The age of the cascade is approaching 40 and it is quite an old age for such a facility. So, it needs modernizing that requires large investments,” the minister said.

Armenia’s former prime minister Hrant Bagratian, who is an opposition lawmaker today, meanwhile, finds that the Vorotan complex could have been sold at a higher price. At a meeting with reporters on Friday Bagratian leveled his criticism at the Armenian government.

“Economically, to build a facility of that capacity today will cost at least $1 billion… To sell it for $180 million on the understanding that $70 million will be invested within a period of six years is not serious, because with the capacity of 500 megawatts you can produce 1.5-2 billion kilowatts of electric power. If you sell it for 18 drams, your sales will amounts to 30-40 million drams, or $100 million. Considering the wear and tear, it turns out that within six years we ourselves would be able to invest at least $40 million,” the oppositionist said.
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