The Armenian government on Thursday admitted that it may annul the sale of Armenia’s largest hydroelectric complex to a U.S. energy firm but insisted that it is facing no pressure from Russia.
According to Davit Harutiunian, the chief of the government staff, the Vorotan Hydro Cascade will not be privatized by a Russian or any other firm if its acquisition by the New York-based group ContourGlobal falls through.
In an interview with RFE/RL’s Armenian service (Azatutyun.am), Harutiunian, asserted that the authorities in Yerevan still hope to complete the $250 million deal with ContourGlobal .
“There are some issues related to the deal but that doesn’t mean that the government intends to scrap the deal,” he said. “We are only raising some questions with our American partners which require solutions. If mutually acceptable solutions are found then there will naturally be no questions left.”
“We have not rebuffed the company with which the contract was signed and are continuing discussions with them. This means that we have not abandoned the agreement,” added the official who has a ministerial rank.
Under the agreement signed on January 29, ContourGlobal was to pay $180 million for three hydroelectric plants making up the Vorotan complex and invest US$70m in their modernization over the next six years. The takeover strongly welcomed by the U.S. government was supposed to be formally completed by mid-April.
However, Armenia’s new Prime Minister Hovik Abrahamian, who replaced Tigran Sarkisian on April 13, put the brakes on the deal, demanding changes in its terms. The Armenian press has since been rife with speculation that Moscow is pressing Yerevan to scrap the deal and sell Vorotan to a Russian energy company instead. Much of the Armenian energy sector is already owned by Russian giants like Gazprom and RAO UES.
“There has been no such pressure,” insisted Harutiunian. He said Abrahamian gave the following assurances at a recent meeting with John Heffern, the U.S. ambassador to Armenia, “We are interested in selling the plant to the American company and can guarantee that if this deal falls through, Vorotan will not be privatized at least in the coming years.” The Armenian premier thus made clear that “there is no political subtext here,” he added.
In Harutiunian’s words, Abrahamian’s recently formed cabinet wants to renegotiate the deal only because it believes that some of its provisions run counter to Armenian law. In particular, he said, the government is not legally allowed to privatize dams and other water-distributing facilities. The Vorotan cascade has a number of such facilities, explained the official.
“Is it theoretically possible that the Republic of Armenia and that [U.S.] company will fail to work out mutually acceptable terms?” said Harutiunian. “Of course it is possible. In that case the deal will fall through.”
The Soviet-built plants are located on the 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.