By Atom Markarian
Armenia is likely to secure $140 million in loans from the government of Japan next year for an ambitious plan to reconstruct an old but potentially strategic thermal power plant in Yerevan, its director announced on Wednesday.
Built on the city’s southern outskirts in the 1950s, the plant used to be a key energy supplier. But its aging natural gas-powered generators have steadily fallen into decay since the early 1990s and need to be replaced with new equipment if the facility is to continue its existence. It currently operates only in winter months and substitutes for the Metsamor nuclear power station when the latter undergoes repairs.
The cash-strapped Armenian government hopes to build a new thermal plant in place of the existing one and has for years been looking for sources of external funding. A team of specialists from the plant and a private Japanese firm has already drawn up a three-year reconstruction plan that calls for $165 million in capital investments.
The government in Yerevan says it is ready to provide $25 million and hopes to raise the rest of the sum from the state-owned International Cooperation Bank of Japan. According to the plant’s director Hovakim Hovannisian, the bank’s board is currently considering the project and will soon submit its judgment to the Japanese government. He expects a “positive decision” from Tokyo next year.
“The plant is very old. It has been working for more than 40 years and has fully exhausted its operational potential,” Hovannisian said, meeting journalists in the Soviet-era facility’s derelict premises. “A new power generating unit would be very efficient and environmentally friendly.”
He also said that the project, if implement, will reduce the cost of one kilowatt/hour of electricity generated there from the current 18 drams (3 U.S. cents) to less than 8 drams, allowing Armenia to save about $20 million worth of natural gas each other.
A completely refurbished and modernized Yerevan plant would be able to meet one third of Armenia’s electricity needs. It would therefore represent an alternative to Metsamor and other Russian-controlled power generating facilities, including the country’s biggest thermal plant located in the central town of Hrazdan. Those facilities account for over 80 percent of Armenia’s current electricity output.
The Russians got hold of them as a result of equities-for-debt agreements signed with the Armenian government over the past year.