A German-Italian consortium officially launched on Friday the construction of a new thermal power plant in Armenia which will reportedly cost around $250 million.
The ArmPower consortium consists of a subsidiary of Germany’s Siemens group and two Italian companies. One of them, Renco, also acts as the engineering, procurement and construction contractor for the new Yerevan-based plant that will further diversify foreign ownership in the Armenian energy sector.
Renco had supposedly launched the project with a ground-breaking ceremony in March 2017 attended by then President Serzh Sarkisian. The actual construction was delayed, however.
Armenia’s new government froze Renco’s contract with the Sarkisian administration shortly after taking office in May 2018. It said the deal is not beneficial for the Armenian side and must be renegotiated. The two sides signed a revised deal in November.
Prime Minister Nikol Pashinian joined senior Renco executives in breaking ground on the site of the 250-megawatt facility which is due to be built within two years. A statement released by Pashinian’s office stressed that electricity to be generated by it 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.
“The new generating capacity will also be used in regional projects: in particular, as part of the Armenia-Iran energy swap program,” said the statement.
The statement also said that more than 1,000 Armenian workers will be involved in the construction. The plant itself will employ about 230 people, it added.
ArmPower secured in March this year more than $200 million in funding for the project from several international lenders, notably the Washington-based International Finance Corporation (IFC). “A modern 250-megawatt combined-cycle gas turbine power plant in the south of Yerevan will help increase efficiency for gas-fired electricity generation,” the IFC said at the time.
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 Italian company has built, installed or operated power generation and distribution facilities in other parts of the world.