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Armenian Government Signs Revised Energy Deal With Italian Firm


Armenia - Armenian Energy Minister Garegin Baghramian (R) and Giovanni Rubini, chief executive of the Italian company Renco, at a news conference in Yerevan, 13 November 2018.
Armenia - Armenian Energy Minister Garegin Baghramian (R) and Giovanni Rubini, chief executive of the Italian company Renco, at a news conference in Yerevan, 13 November 2018.

The government signed on Tuesday a revised agreement with an Italian company planning to build a new thermal power plant in Yerevan that will further diversify foreign ownership in Armenia’s energy sector.

The company, Renco S.p.A, supposedly launched the $250 million project with a ground-breaking ceremony in March 2017 attended by then President Serzh Sarkisian. The start of the construction was apparently delayed for unknown reasons, however.

Armenia’s current government froze Renco’s contract with the Sarkisian administration shortly after taking office in May. It said the deal is not beneficial for the Armenian side and must be renegotiated.

Armenia - Officials hold a ground-breaking ceremony for the construction by an Italian company of a new power plant in Yerevan, 20Mar2017.
Armenia - Officials hold a ground-breaking ceremony for the construction by an Italian company of a new power plant in Yerevan, 20Mar2017.

Prime Minister Nikol Pashinian said last week that the government “had a problem” with the cost of electricity to be generated by the new 250-megawatt plant and purchased by the Armenian state.

“We thought that the price offered by them is inflated and as a result of negotiations that price was cut,” Pashinian told his cabinet as it gave the green for the revised deal with Renco.

The deal was signed by Armenian Energy Minister Garegin Baghramian and Renco’s chief executive, Giovanni Rubini.

Speaking at an ensuing news conference, Baghramian said that the Italian firm agreed to cut its electricity tariff by 5 percent. That, he said, will allow Armenia to save $160 million in energy expenses over the next 25 years.

Baghramian also stressed that Renco’s electricity will be cheaper than power supplies coming from two other gas-powered plants that currently meet roughly one-third of the country’s energy needs.

Armenia - A thermal power plant in Yerevan.
Armenia - A thermal power plant in Yerevan.

One of those plants was built in Yerevan in 2010 with a $247 million loan provided by Japan’s government. The other, more powerful facility is located in the central town of Hrazdan and owned by Russia’s Gazprom giant.

Rubini told reporters that his company is keen to start building the new plant “as soon as possible.” But neither he nor other officials present at the signing ceremony gave any concrete dates. They said only that the construction will take just over two years.

Renco has done business in Armenia since the early 2000s. It has not been involved in the local energy sector until now, investing instead in luxury housing, hotels and office buildings. But the company has built, installed or operated power generation and distribution facilities in other parts of the world.

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