ARMENIA SAID TO REMAIN INDEPENDENT DESPITE ENERGY TIE-UPS
by Ashot Aramyan

Golos Armenii, Armenia
Dec 5 2006

"Armenia remains an independent player in the region"

We are publishing an exclusive interview with Energy Minister Armen
Movsisyan.

[Golos Armenii correspondent] Mr Minister, how do you assess the energy
security level of Armenia taking into account that 80 per cent of
energy generating capacities and energy distributing networks are in
the hands of [president of RAO UES] Anatoliy Chubays, that the Razdan
Power Plant [RPP] is in the hands of Russia, and its fifth block is
in the hands of Gazprom, and that in all probability the Iran-Armenia
gas pipeline will be also given to Gazprom? Can one have the role of
an independent player at least in the region in such conditions?

[Armen Movsisyan] I am absolutely sure that in this case we lost
nothing and even gained something. Armenia has been depended 80 per
cent on Russian energy resources and on the policy of that state. But
all the benefits of Russia ended at the border with Armenia and
nothing affected that. But now we have drawn their benefit closer to
our generating capacities and have connected that with the solution to
our problems. For instance, by handing over the fourth block of RPP
to Russia under the "property for debt" programme, we said: before
receiving gains, you should provide the plant with energy resources,
produce electric power, and ensure it is efficient. And the result
is obvious: if earlier only two out of the four RPP turbines were
functioning, then today – thanks to the works implemented by the new
owner – all the energy blocks may function.

As for the Armenian Nuclear Power Plant [ANPP], the Russians used
to merely supply nuclear fuel, but today when they have taken over
finance management of the plant, they are ensuring its effectiveness,
producing and selling electric power, and only after that are they
obtaining profit. Thus, even though they are the owners of our
generating capacities and other energy facilities, they cannot act
against our politics as they do not have the levers to affect our
national interests. Thus Armenia remains one of the fundamentally
independent energy players in the region.

[Correspondent] What other elements in the state energy policy would
you say increased the energy security of the state?

[Movsisyan] The state policy in the sphere of small hydro-energy
generation – that is, the strict and unchangeable rules of the game
and attractive tariff policies – mean that today 48 small power
plants are providing electricity to the network, and another 52 are
being built. The state obliges the grid to buy electricity produced
at such plants without any limit for 15 years. In several years we
shall have more than a hundred small power plants which will supply
about 10 per cent of the overall electricity demand, and this is a
very good indicator.

[Correspondent] Alternative energy has a very important part in
provision of energy security. What is the situation in Armenia?

[Movsisyan] Today we have serious applications to build wind-generating
plants. An Italian company is ready to build plants working on wind
power. Some 80 plants with an overall capacity of 90 MW of electricity
are envisaged. And 130-140m dollars will be invested.

[Correspondent] What about other alternative sources of energy?

[Movsisyan] Geo-thermal energy may prove to have very good prospects
in our republic and we are conducting serious research in this
sphere. Unlike the wind plants, they can function in a permanent
regime regardless of the wind. An Armenian businessman from Argentina
– Eduardo Ernikyan – will finance the construction of the first
geo-thermal plant in Armenia: it will be located in Sisian and borings
will start in spring.

[Correspondent] Government of the Republic of Armenia has recently
approved a draft agreement with Iran on construction of the Megri
power plant on the river of Araz at a cost of 140m dollars.

Construction of a third high-voltage electric power line was planned
for the beginning of next year, and it will connect the energy systems
of Armenia and Iran. What will all these projects on synchronization of
the energy systems of Armenia, Iran and Georgia give to our republic?

[Movsisyan] The Megri power plant will be the most effective power
plant in Armenia. The capacity of each power plant deployed on the
various banks of the Araz will be 140 MW. It is foreseen that the
Iranian party will provide Armenia with a 150m-dollar loan which
we will repay by supplying electricity. And construction of a third
high voltage Armenia-Iran power line will start in early 2007. The
point is that our electricity consumption differs from that of Iran:
we have bigger demand in winter, but in Iran it declines in winter. We
make use of this circumstance for mutually beneficial cooperation.

Optimization of the energy regime with Iran will allow us to overcome
any force-major situation. And construction of another high voltage
power line between Armenia and Georgia will give good opportunities for
synchronization of the work of the energy systems of the neighbouring
states, taking into account the fact that via Georgia we can have
connection with the energy system of Russia. We have good prospects
for integration of our energy system with that in other states.